Andreas Froschki, director of equity research for Europe at Allianz Global Investors, is keen on opportunities in what he calls the four mega-trends for global investors.
Global investors should adjust their portfolios to capitalise on technological disruption, demographic and social change, resource scarcity and urbanisation, suggests the equity research director of Allianz Global Investors in identifying the four global mega-trends that will shift consumer behaviour, regulations and business landscapes in the coming years.
“Investors have to be active in adjusting their portfolios to optimise their returns by strategically investing in industries that will be positively affected by these four mega-trends,” Andreas Froschki, director of equity research for Europe at Allianz Global Investors, said on Friday at a seminar titled “The Thematic Investing Strategy”.
Different business opportunities arise from the impact of ageing societies in various societies, including in Thailand. The emergence of younger middle-class citizens who are digital natives has also contributed to the technological disruption in markets, such as the increased use of automation and artificial intelligence in the manufacturing sector, Froschki said.
Meanwhile, resource scarcity and the urbanisation of cities had led to issues of insufficient public services and waste management, as well as overcrowding.
One industry which Allianz has identified as part of this mega-trend is the pet industry. The growing middle class, ageing population, more single people in the younger generations, and changes in social perceptions of animals have led to rising demand for pets globally, Froschki said.
From 2010 to 2017, the value of the pet industry in the US increased from US$48 billion to $69 billion, growing at an average rate of 5.2 per cent year on year, according to the American Pet Products Association.
On the other hand, Froschki added, Asia has seen up to 15 per cent growth in the pet industry in the past decade.
“From this investment opportunity, investors should consider investing in businesses that produce commercial pet toys, pet food and the veterinary industry,” he said.
When targeting in a particular theme, he said, investors should invest in at least 30 stocks in the theme to gain the optimal benefits from the rising trends, rather than allowing their returns to be determined by the fluctuation of individual stock prices.
Furthermore, investors should be more active in choosing the timing of their investments, said Neil Dwane, global strategist for Allianz Global Investors.
For example, the annual percentage change in the Japanese stock market is up to 225 per cent year on year.
“But these changes consist mostly of mild rallies and drawdowns, and the Nikkei index has stayed within the same bracket for nearly 30 years,” he said. “More and more stock markets in Asia are becoming like the Nikkei, volatile but only within a certain bracket, creating return opportunities for active investors.”
