Posted inIndustry viewsAsset Class in Focus

China’s middle class now largest worldwide

Funds that focus on China consumption are among those that should benefit from the expanding Chinese middle class, which has overtaken the US to become the world's largest.

According to a report from Credit Suisse, 109 million Chinese adults qualified for its middle-class rank as compared to 92 million in the US.

A Chinese individual that has $28,000 in assets qualifies as a member of the middle class, the report said. For a middle class indivudal in the US, the figure is $50,000.

The firm noted that the middle class drives a significant part of demand for a wide range of consumer goods and financial services.

“The growth of wealth in emerging markets has been most impressive, including a five-fold rise in China since the beginning of the century,” Credit Suisse’s CEO Tidjane Thiam said in a separate statement.

Fund houses identified online retail, discretionary consumer products, financial services and real estate as sectors that will ride the wave of the Chinese middle-class growth.

Standard Life Investments said last week the growth of e-commerce platforms have allowed retailers to extend their reach even to consumers in China’s tier 3 and 4 cities.

Franklin Templeton Asset Management noted at Fund Selector Asia’s Alternatives Forum in Singapore last month that China’s real estate market would expand as rural dwellers continue moving into urban regions – with Tianjin, Chengdu, Chongqing, Wuhan, Guangzhou and Shenzhen possibly becoming megacities.

“By 2030, China will have built 50,000 new skyscrapers – the equivalent of up to ten New York cities,” FTAM said.

New Investment Management said last week that it believes Chinese banks and property companies are good long-term bets. It disclosed that it is retaining exposure in the Chinese financial sector through wealth management companies, insurance companies and selected REITs.


Top performing funds with significant exposure to China consumption:


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