Bright Future Series Volume 1: Global Economic Renaissance
Throughout human history, we’ve had to deal with poverty, disease, oppression, and other things that
have impeded our collective growth. As this article discusses, the world is in the midst of an Economic
Renaissance. Furthermore, this Global Economic Renaissance is rapidly accelerating, mostly due to the
proliferation of the global middle class.
We believe that the growth of the “New Global Middle Class” will have an unprecedented effect on
equity markets. Although we believe the future is bright for other reasons that will be discussed in subsequent
articles, one of the foremost reasons is because of the New Global Middle Class.
The End of Poverty
President Harry Truman once said, “More than half the people in the world are living in conditions
approaching misery. For the first time in history, humanity possesses the knowledge and skill to relieve the
suffering of those people.” Although this change didn’t happen as quickly as President Truman had hoped, the
world has recently made extraordinary progress in raising people out of extreme poverty.
Between 1990 and 2010, for example, the number of extreme poor (defined as living on less than
$1.25/day) fell by almost 1 billion people. To put this into perspective, the population of extreme poor was
nearly cut in half in 20 years. Today, the total number of people living in extreme poverty is roughly 1.2
Billion. In 2030 this number is expected to fall to 600 Million. The most dramatic improvement is projected to
take place in the Asia-Pacific region (India, China, etc.).
The New Middle Class
The number of people entering the middle class is likewise expected to be unprecedented in the next two
decades. In 2009, the global middle class numbered roughly 1.8 Billion. In 2020, that number is expected to be
3 Billion. In 2030, the New Global Middle Class is expected to almost triple from today’s numbers to 5
Billion people, or 60% of the relative population versus 25% today!
Bright Future Series - Greg Stokes
The vast majority of the New Global Middle Class will come from the Asia-Pacific region. In 2009,
the Asia-Pacific region’s middle class population was 600 million. In 2030, the Asia-Pacific region’s
middle class population is expected to number 3.2 Billion--or an increase of approximately 533% from
today’s numbers.
What this Means for Investors
Together with the elimination of poverty, the burgeoning New Global Middle Class presents a
wonderful opportunity for investors. As people enter the middle class, products and services that were once
luxuries become affordable. According to McKinsey & Co. “[b]y 2025, annual consumption in emerging
markets will reach $30 trillion--the biggest growth opportunity ever to exist in capitalism.” (“Winning the $30
Trillion Decathlon”).
From an investor’s perspective, the following sectors hold the most promise because of the New Global
Middle Class: technology, consumer staples, consumer discretionary, and financials. The New Global Middle
Class will want what they couldn’t have when they were poor: 1) connectivity (virtual or physical) to people; 2)
products and services that make peoples’ lives easier (toothpaste, cars, etc.); and, 3) fatty foods, sugary
beverages, alcohol and tobacco. Banks will provide the financing to help these new and existing sectors
flourish. Focusing on companies that provide these goods and services to the New Global Middle Class is a part
of our overall investment strategy, which we believe will prosper in the upcoming decades.
Bright Future Series - Greg Stokes
Negative media grabs headlines, and, unfortunately, sometimes influences investors to make poor decisions.
The purpose of the “Bright Future Series” is to highlight the reasons we believe it’s a great time to be an
investor and participant in the New Global Renaissance.
Disclaimers:
Registered Representative offering securities and investment advisory services through Cetera Advisor Networks LLC (doing
insurance business in California as CFGAN Insurance Agency), member FINRA SIPC. The opinions expressed in this commentary
are those of the author, Gregory J. Stokes, J.D., esq. and are not intended as specific investment advice. Comments concerning the past
performance or future expectations of money instruments are not intended to be forward looking and should not be viewed as an
indication of future results. Investors cannot invest directly in an index. Additional risks are associated with international investing,
such as, currency fluctuations, political and economic instability, and differences in accounting standards.