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| UBS bets on Asian consumption story |
| Chen Shiyin / New York Feb 09, 2009, 00:12 IST |
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Rapid economic growth will boost the consumption story in India and China.
China Yurun Food Group and India’s ITC are among 18 stocks that will benefit most from growth in Asian consumption, UBS AG said. Investors should buy shares of companies in China and India that will gain from demand for food, health, education and phone services, UBS analysts led by Simon Smiles said. They also recommended cemetery and crematorium operators in Australia, China, Hong Kong, South Korea and Singapore, and advertising companies in Japan and India.
“Rapid economic growth in Asia has been accompanied by strong growth in consumption,” the analysts wrote. “We suggest exposure to particular types of consumption in particular countries that we expect to benefit, based on their structural, cultural and economic characteristics.”
The MSCI Asia-Pacific Index has dropped 7.8 percent this year, extending last year’s record 43 percent slump, amid concern the global recession and financial crisis will dent consumer spending and weigh on company earnings.
World economic growth will be 0.5 percent this year, the weakest post-war pace, with bank losses reaching as much as $2.2 trillion, the International Monetary Fund predicted on January 28. Developing Asia is still likely to grow at a faster pace, with the fund forecasting expansion of 5.5 percent this year.
China Yurun, the country’s biggest hog processor, has gained 9.5 percent in Hong Kong-trading this year. Protein consumption will likely increase in developing countries with relative income equality, including China and India, UBS said. Health, education China, India and the Philippines will see increased demand for health and medical services as their populations age, while low government contributions will spur the growth of education in China, India and Indonesia, the analysts said.
ITC, India’s biggest tobacco seller, and PT Astra International, Indonesia’s largest auto retailer, are among companies that will benefit from local demand, according to the report. ITC has climbed 5.4 percent this year, while Astra has jumped 18 percent.
Investors should buy shares of Invocare, an operator of funeral homes, cemeteries and crematoriums in Australia and Singapore, to tap on a “significant growth” in death rates, the report said. Singapore expects one in five of its population to reach the age of 65 by 2030, from one in 12 now, according to government data.
The author is a Bloomberg News columnist. The opinions expressed are his own
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