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October 2018
Source: Ashburton Investments
Key messages
2
• 2030
• A billion boomers
• Millennials and the “Crazy Rich Asians”
• Consumption trends
• Investment implications
3
Economic history:
China and India
turning back the
clock0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 1000 1500 1600 1700 1820 1850 1870 1900 1913 1940 1950 1960 1970 1980 1990 2000 2008
Share of global GDP
United States Europe India China Rest of the World Africa Brazil Russia
Economic history: China and India turning back the clock
Source: Angus Maddison, Ashburton Investments, United Nations
More people live inside this circle than outside it
Source: Ashburton Investments, BCMM Brilliant Maps
5
Global distribution to 2030
Source: Homi Kharas, Brookings Institution
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Global distribution of the middle class to 2030
China India Other Asia Japan USA EU Other
Middle class market in 2015
Source: Ashburton Investments, Mauro F. Guillen
Middle class market in 2030
Source: Ashburton Investments, Mauro F. Guillen
Source: Ashburton Investments, CLSA
Rise of the millennials (Born 1983 – 1998)
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0
50
100
150
200
250
300
350
China India Indonesia Japan Korea
Millennials in each country
Mill
ion
s o
f p
eo
ple
Source: Ashburton Investments, CLSA
Rise of the millennials (Born 1983 – 1998)
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0
1
2
3
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6
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9
10
China India Indonesia Japan Korea
(US
$ t
rilli
on
s)
Expected addition to total consumption, 2017 - 30
Mill
ion
s o
f p
eo
ple
Rich young things
Source data: CapGemini/Merrill Lynch Global Wealth Management, CLSA
0
20
40
60
80
100
120
World 2008 World 2010 Asia-Pacificex Japan
Japan Europe LatinAmerica
Middle East NorthAmerica
Ye
ars
Millionnaires by age
<31 31-45 46-55 56-65 66-75 75+
Source: Ashburton Investments, Bloomberg, IMF
The astonishing rise of China
11
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000 GDP, current prices (PPP, int'l $ billion)
United States China
Source: Ashburton Investments, Bloomberg, IMF
The astonishing rise of China
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0
5
10
15
20
25
30
U.S China India Germany Brazil
Growth in per capita GDP (1990-2017)
Source: Ashburton Investments, Young China Group LLC
‘Old’ versus ‘new’ China
13
Source: Ashburton Investments, Young China Group LLC14
‘Generation Gulf versus Generation Gap’
USA then…
Source: Ashburton Investments, Young China Group LLC15
‘Generation Gulf versus Generation Gap’
USA now…
Source: Ashburton Investments, Young China Group LLC16
‘Generation Gulf versus Generation Gap’
China then…
Source: Ashburton Investments, Young China Group LLC17
China now…
‘Generation Gulf versus Generation Gap’
Source: Ashburton Investments, Young China Group LLC18
Baby Boomers Millennials
Insulated Open minded
Impoverished Rags to riches
‘Sick man of Asia’ Proud
Local successes Globally cosmopolitan
Nouveau riche 2nd/3rd generation wealth
Glitz orientated Glitz/Value orientated
Eat bitter Live in the moment
Proud + local Proud + global
‘Generation Gulf versus Generation Gap’
A story of commercial success and investor excitement
China’s digital economy
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790
74
0
200
400
600
800
1000
Mobile payments, 2016, $ billion
China United States
0%
20%
40%
60%
80%
100%
Total Number Total valuation
% of global unicorns, June 2016
China United States Rest of the World
0%
20%
40%
60%
80%
100%
2005 2016
% of total retail e-commercetransaction value
China United States Rest of the World
Source: Ashburton Investments, McKinsey & Co, 2018
Source: Ashburton Investments, China Daily/Asia News Network, Twitter,
A new payment ecosystem: No cash = no problem!
11
China’s rising consumer class
21 Source: Ashburton Investments, Euromonitor
Per-capita consumption
per category
(US$) 2017 2030
Food & beverage 749.8 1950
Alcohol & tobacco 274.2 716.9
Clothing & footwear 246.6 744.4
Housing 722.3 2160.4
Health related 158.9 477.9
Transport 377.9 1122.3
Leisure & recreation 186.9 548.5
Education 168 480.9
Hotels & catering 187.3 540.2
Personal care 65.2 162.3
Others 228.9 649.2
0%
50%
100%
150%
200%
250%
Accumulated % growth per category, 2017-30
Source: Ashburton Investments,IMF, Factset, Bloomberg, 2018, *PPP (Purchasing Power Parity )
Maybe the most important chart for investors
22
0% 5% 10% 15% 20% 25% 30% 35%
MSCI All Country World Index
Bloomberg BarclaysGlobal Aggregate Index
Market capitalisation (total)
Military spending (current),adjusted PPP*
GDP (current prices),adjusted for PPP*
Foreign exchange reserves
Money supply
China's share in the world
23
India- the world’s fastest
growing major economy
Source: Ashburton Investments, CLSA 2018 24 Source: Ashburton Investments, CLSA 2018 24
India demographics
Source: Ashburton Investments, CLSA 2018 25 Source: Ashburton Investments, CLSA 2018
Indian e-commerce growth
25
45
450
0
50
100
150
200
250
300
350
400
450
500
2017 2028
US$ (bn) India e-commerce market
10x
Source: Ashburton Investments
India's "Iron triangle" - Payments = Opportunity
26
1. Payments
Opportunity
Source: Ashburton Investments
What is enabling India’s explosive
growth in e-commerce?
27
Source: Ashburton Investments28
Like China - A new
payment ecosystem:
No cash = no
problem!
Source: Ashburton Investments29
Source: Ashburton Investments
Access to financial
services facilitating
change
30
Government pushing digital payment reforms
31
Source: Ashburton Investments
Iron triangle “Iron triangle” = Data = Access
32
1. Payments
2. Data
Access
0
1
2
3
4
5
6
7
8
9
0
20
40
60
80
100
120
140
160
180
UK US China SA India
ZAR
co
st /
GB
dat
a p
lan
Data affordability GB/month usage
Source: Ashburton Investments
Smartphone penetration moving up
33
Affordability of smartphones now similar to China (1.3% of GDP/capita)
0
10
20
30
40
50
60
70
80
90
100
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
US v India smartphone penetration
India (2011-2017) USA
Source: Ashburton Investments
India’s “Iron triangle” = Logistics = Delivery
34
2. Data
3. Logistics1. Payments
Delivery
Access
Opportunity
35
Logistics – on the road, and rail to success
Source: Bloomberg, Ashburton Investments, CCI
START
Delivering goods from
Punjab to Kerala:
PRE GST= 21 DAYS
POST GST= 9 DAYS
FINISHING
36
The India investment opportunity
Source: Ashburton Investments
Technology + Government
Aadhaar / UID
Digital platforms
Financial mobility
India Stack
Smartphones
Consumption Investment
Economic growth
Bank accounts
Demographics
Rural
Urban
i
Source: Ashburton Investments 37
Ashburton Chindia Equity Fund
MSCI India
MSCI China
MSCI RussiaMSCI South Africa
MSCI Korea
MSCI Brazil
MSCI EM
-20
-10
0
10
20
30
40
50
60
70
80
12 17 22 27 32 37
Retu
rns (
%)
Annualised daily volatility (%)
5 year Risk adjusted returns (USD)
Chindia Equity as part of a balanced portfolio
38
92
102
112
122
132
142
152
162
9/3
/13
11/3
/13
1/3
/14
3/3
/14
5/3
/14
7/3
/14
9/3
/14
11
/3/1
4
1/3
/15
3/3
/15
5/3
/15
7/3
/15
9/3
/15
11
/3/1
5
1/3
/16
3/3
/16
5/3
/16
7/3
/16
9/3
/16
11
/3/1
6
1/3
/17
3/3
/17
5/3
/17
7/3
/17
9/3
/17
11
/3/1
7
1/3
/18
3/3
/18
5/3
/18
7/3
/18
9/3
/18
Utilising the Chindia Equity Fund in a Global Balanced portfolio
Balanced portfolio (65% Global equity/ 35% Global bonds) Balanced portfolio (65% Global equity / 35% Global bonds, using Chindia as an EM Proxy)
Source: Ashburton Investments
Source: Ashburton Investments , Bloomberg
Chindia Equity as part of a balanced portfolio
39
Balanced PorfolioBalanced Portfolio using
Chindia as an EM proxy
Total Return Performance 32.12% 43.86%
Compounded Annual Return 5.74% 7.56%
Annualised total Volatility 8.53% 7.55%
Source: Ashburton Investments
Source: Ashburton Investments , Bloomberg
40
Summing up
4
0
• 2030 – a very different place to today
• China and India’s millennial generation
• Investment opportunities are wide-ranging
• Do you have appropriate exposure?
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