A headline in the Wall Street Journal yesterday…”Suddenly There Aren’t Enough Babies. The Whole World Is Alarmed.”
These reports are becoming much more frequent, from countries all around the world.
Are investors taking this into account?
Are they considering the impact of a declining and ageing population on the companies or bonds they invest in?
Or are they chasing the trends – FAANG, the Magnificent 7, MAMAA, or whatever acronym comes next?
AI themes are all the rage now – e.g. Nvidia – but future revenue is ultimately dependent on the number of end-consumers at that time.
And prime, addressable markets in many developed countries are forecast to shrink in the years ahead.
This will impact growth projections and investor returns.
Fortunately, not all companies will be impacted in the same way.
Depending on the regions the company trades in, the target age group of its products or services, and the locations of its production base, a demographic risk for some could a be demographic opportunity for others.
Similarly, credit risk of bonds will be impacted by the demographics of the issuer.
Investors must include demographic analysis as a standard tool in their analysis.
Chat with us for guidance on demographic analysis in investments.