Women in emerging nations are aiming higher and they represent one of the highest growth opportunities for an investor today. A research report released by Espirito Santo Investment Bank, (Emerging Markets Women Aiming Higher) by José Martins Soares, highlights on how investors can play the increasing role of women in emerging markets.
The study has selected 13 emerging markets for the analysis: Brazil, China, Czech Republic, Hungary, India, Indonesia, Republic of Korea, Mexico, Poland, Russia, South Africa, Turkey and Ukraine. These nations currently represent one-third of world GDP, and are expected by 2016 to represent half of the world economy.
It is a known fact that western world women have made progress and have almost achieved equality in terms of narrowing the existing wage gap. However, most women from the emerging economies have lagged this progress. The study reiterates the fact that globalisation makes this situation unsustainable and herein lies the investment opportunity.
Over the past 30 years, China has multiplied its GDP by 40x in PPP (Purchasing Power Parity), with India multiplying it by 14x. Over the same period, most of the developed World multiplied their wealth by 4-5x. By 2016, the so-called Bric countries are expected to represent 80% of the GDP of the US, Japan and EU-15 put together, from the current 60%.
According to BCG, 1 billion women now participate in the workforce globally and control 50% of the wealth in the US. But importantly, along with the increase in purchasing power, women make or influence 60-80% of all the consumption decisions. This makes women the largest addressable market globally.
The factors which influence the consumption patterns in India are diverse. With changing demographics, rising incomes and under-penetration emergence of women, both as a consumers and decision maker is playing a tremendous role. According to a recent IMRB survey of about 9,000 urban Indian women, the income of women living and working in cities increased to Rs 9,457 a month in 2010, up from Rs 4,492 in 2001.
Women are emerging as decision-makers when it comes to purchase of most consumer durables, health and beauty items and also groceries. An interesting study by Nielsen in 2011 found that Indian women are the most likely to spend (rather than save) any extra cash they might happen to have on themselves over the next five years. Nearly all, 96%, anticipated buying clothes, while 77% said they would buy health and beauty products and 44% planned to purchase home electronics.
Women in the emerging markets still face obstacles in their pursuit of equality, despite all the progress so far. In as early as 2011 also, it has been seen that emerging market women were still getting married at a significantly early age. 47% of 20-24 year old Indian women were already married before the age of 18. However despite early marriage, women have been able to delay motherhood. This helped them in joining the workforce and getting independent.
Due to adoption of role models as seen on TV or via access to other cultures (globalisation) or because now husbands and wives are now distracted from contraception, there has been a considerable reduction in birth rate.
Educating the girl child has resulted in the ratio of girls to boys in primary and secondary education in India has increased from 67% to 95%. Several studies point to the fact that when the deciding agent is a female, more likely than not, the welfare of the children and the family is put first.
Emerging markets have mirrored the growth and growth patterns of the developed countries. Contribution of women to consumption in the western world is well documented and it is not unlikely that they will be replicated in emerging markets too. Initial data shows cosumption picking up. Consumption as a percentage of GDP over the last 30 years, for top 13 countries has risen from 12% of the total consumption to almost 30%.
Investors can focus on few sectors with key exposure to emerging markets women: - Food, health/Beauty, Apparel, financial services, health care, consumer durables, telecom services and real estate.
Espirito Santo says that Marico, SKS Microfinance and TTK Prestige closely track the consumption story.