Home' Forge : Vol 1 No 3 Contents wealth creator // 139
The Australian tourism industry is a big
winner from long-term growth in Asian
middle-class consumption. As incomes
rise, more people in China, then India
and later South-East Asia, will travel
overseas for the frst time.
In the short term, a lower Australian
dollar is improving our tourism
sector 's international competitiveness,
and encouraging more Australians to
International visitors to Australia
increased by eight per cent to a record
6.4 million in 2014, Tourism Australia
data shows. Fourteen of Australia’s top
20 tourism markets reported record
arrivals, and Asian markets delivered an
11 per cent increase in visitors and total
Proposed investment in the
Australian tourism pipeline grew by
nine per cent to $53.7 billion in 2014,
and another 71 projects entered the
tourism investment pipeline in 2014,
Tourism Research Australia data shows.
Several ASX-listed stocks are strongly
exposed to this trend. Sydney Airport
is an obvious winner. Crown Resorts,
which has a 33.6 per cent stake in the
Nasdaq-listed Melco Crown, owner
of casino resorts in Macau, is another
long-term benefciary, and is worthy
of further analysis for those seeking
long-term exposure to inbound and
5. Smart phones
Another three billion middle-class
consumers by 2030 will drive even
stronger growth in smart phones,
particularly in emerging markets.
The latest Google Consumer
Barometer showed that smart phones
have by far the highest appeal of any
electronic device in emerging markets.
A new or recycled smart phone appears
to be among the frst purchases for those
who move into the middle class.
This trend is entrenched in Singapore
and South Korea, but less so in emerging
markets. Indonesia, for example, has
only 43 per cent penetration of smart
phones among its adults, and India also
has low penetration. As the middle-class
consumption boom rolls on, watch for
penetration rates in emerging markets to
Smart phone upgrades will drive
growth in established markets. A
UBS survey in May showed a strong
aspirational market in emerging
markets for upgraded smart phones.
UBS found that about 61 per cent of
Chinese consumers surveyed intended
to upgrade their smart phone in the next
12 months. The upgrade market is partly
offsetting slowing growth in smart phone
demand in China, albeit off a high base.
Good judges, such as Montgomery
Investment Management, favour the
United States giants Qualcomm Inc and
Apple Inc for exposure to this trend.
Apple believes that China will eventually
be its largest smart phone market.
6. Ageing population
The United Nations predicts that the
world’s over-60 population will more
than double to two billion by 2050, that
nearly eight in 10 over-60s will live in
emerging economies, and that almost 400
million will be aged 80 or over.
Moreover, the rise of the global
middle class, expected to more than
double to 4.9 billion by 2030 on OECD
forecasts, means giant new markets
for global pharmaceutical and health
companies. As emerging economies
develop and stronger health systems are
formed, millions of consumers in coming
decades will have access to subsided
medicines for the frst time.
In developed economies, robots
will help elderly people, e-health will
improve regional health outcomes,
and new communications will help the
elderly live at home for longer.
Investment opportunities will extend
well beyond pharmaceutical companies,
hospitals and aged-care providers. Wealth
managers will beneft as the global pool of
retirement savings swells, and makers of
wearable technology that monitors health
will be in higher demand, as will leisure
and consumer staples companies that
target older people.
Global healthcare stocks are the best
way to play the ageing trend. They
are typically cheaper than comparable
Australian healthcare stocks, and this
market has limited choice in large
healthcare stocks. The ASX-quoted
iShares Global Healthcare ETF is an
option for those seeking diversifed
exposure to offshore health stocks
through index funds.
Tony Featherstone is a former managing
editor of BRW and Shares magazines.
This column does not imply any stock
recommendations or offer fnancial
advice. Readers should do further research
of their own or talk to their adviser before
acting on themes in this article. All prices
and analysis at 18 August 2015.
BE ITS LARGEST
EIGHT PER CENT
TO A RECORD 6.4
MILLION IN 2014
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