Year end is approaching. In a blink of an eye, we will welcome 2012. New resolutions with new targets. The question is, which sector/s should I concentrate next?
Hence, I decide to consolidate the top 5 trends in Asia (as a snapshot) based on my personal opinion and forecasts.
* All investments contain a level of uncertainty and carry specific risks. Please seek your licensed Financial Consultant first before making your decisions.
As we know, in the past months, we have seen several acquisitions such as Thomson Medical Centre bought over by Mr. Peter Lim and Khazanah Nasional Bhd took Parkway Holdings private. In addition, Fortis Healthcare plans to be a dominant player in Asia. Companies are expanding and capturing market shares in the region.
Indeed, with better living standards and rising life expectancy across Asia, there is a demand for higher quality healthcare - a possibility where the need outstrips supply. The wealth of the Chinese & Indonesians are fast increasing and they can contribute to the growth of private healthcare services such as specialist services, diagnostics and radiology - "who does not want the best treatment if you have money?" According to data estimates, spending on healthcare in 2010-2011 has increased by 17% year-on-year.
Thus, there are ample opportunities for larger healthcare players to evolve in Asia and this makes retail investors like you and me to watch out for global firms with larger resources, contacts and scalability to shift into Asia.
2. Luxury Goods
Apart from branded handbags, watches and jewellery, luxury products refer to fine wines and champagne, stationery, instruments, tea, travel etc. The total market for luxury goods in Asia Pacific is worth billions with consumers from emerging economies (including locals and tourists as their wealth expands) account for 44% of global sales - up from just 25% in 2005. The Chinese makes up a third of it, especially they can afford to travel abroad (I flew to Europe, saw them in almost every branded shop - one of them bought 20-30 Longchamp bags, Paris in one single receipt and that dude paid in Euro dollars straight up!).
About 56% of Chinese consumers' total luxury purchases were made outside the country. Some forecasts points out that Chinese consumers could grow at a rate of 15%to 20% over the next 10 years, contributing 40% to the luxury market growth during the period. In general, Asians tend to self-indulge and showcase successes in comparison to European consumers.
Companies such as LVMH has bought up 20% stake in local firms such as Charles & Keith and the recent interest to buy 41% of stake in Heng Long. LVMH investment holdings arm has set up their Asia Pacific quarters in Hong Kong, closer to mainland China - position themselves to capitalize on the growth opportunities.
Probably, as a retail investor, I will be keen on high-end companies & retailers that are directly/indirectly exposed to the luxury goods sector.
3. Cloud Computing
I am not an expert in this topic but foresee a growing trend. Wikipedia defines cloud computing as a service, whereby shared resources, software and information are provided to computers and other devices as a utility over a network (typically the internet).
Techology and telecommunication companies are recognizing this trend and are looking into ways to collaborate effectively. For example, China Huawei Technologies sells the network equipment that telcos use to operate their mobile networks. The firm also sells wireless and networking equipment. A synergy between a leading telecommunication firm could reap in mutual benefits. In fact, China Huawei Technologies has reorganized its corporate business structure into three main divisions that focuses on three main elements: the cloud, the pipe and the device.
Not to forget the likes of Microsoft and Intel. Should a company streamlines their resources and study into the patterns of cloud computing or to work closely with specialist vendors, we may see higher earnings prediction by analysts - driving the positive sentiment amongst the investment community.
4. Health & Wellness
In Asia, especially China, the rate of Obesity is shooting up due to their indulgence in online gaming and social networking. This was derived from China's high internet penetration rate (China has the world's largest online community stemming from their vast population). As a result, sports and related healthy activities do not form the agenda for the younger generatiion. When they are hungry, they prefer to order their quick fast food fixes online.
It's not just America's problem but that of the Chinese.
Apart from Obesity, we could see other related illnesses such as heart diseases are fast rising. This can be a worrying trend of Cardiac diseases in China. As of now, I do not have the statistics of other countries in Asian but I will not be surprised if there is a large market of vitamins and dietary supplements (by retail sales in off-trade channels) in the region, comparing from the last and next 5 years.
Henceforth, companies like Cerebos or consumer pharmaceutical firms are able to fill in the demand by consumers to remain healthy with their range of products. Government intervention and encouragement on a national level is of primary importance.
Health & wellness can relate to beverages, tonic and other functional drinks & food. Will this be a potential chance for retail investors to ride on the future trend?
5. Robots, media & animation
Do we always have a kid in us? I think we may, judging from our early childhood days or realms of experiences. Well, I may be wrong but I may be right too. The little kid in us can connect us to the new media which we enjoy through joy and laughter. I am referring to the future blossoming of 4D & 5D - at the moment, 3D is the norm.
Look at Kinect and arcade games using sensor. Adults and children love it. Maybe your facial expression can activate realtime gaming experience in the future.
In Asia, Japan and Korea are the top 2 countries for consumers spening a huge chunk of their disposable income on gaming.
On the other hand, robots can diversified into several prototypes - lifetime partner, pets, househould chores, hobbymate etc.(goodness me! if the robot runs amok and chase after me with a chopper in hand!).
Our world has changed dramatically from Industial Age to Information Age. For myself, I will be happy to anticipate the trend and buy into a potential growth story - at the moment, the likes of luxury goods sector is something interesting.