Take a bet on Asia – with the man from the Pru, says MR MONEY MAKER Justin Urquhart Stewart
Let me take you away, at least for a moment, from the constant energy drain that is listening to those endlessly talking about the pandemic.
There is one global theme which is likely to continue and one which our portfolios should take account of – this is the rise of the global retail consumer.
However, by this I do not just mean us, but rather those in the far more populous emerging economies around the globe.
Timely: For some good exposure to the growth of the Eastern consumer and an investment in a rather conservative insurance business, then a direct holding in the Pru seems good value
As the world economy gets stronger, so consumer wealth will usually reflect it. This is of course neither evenly nor fairly spread, but spread it has.
Why Does It Matter?
The primary driver in the US and UK economies is the consumer, who accounts for over 60 per cent of national income.
In due course, developing nations are following a similar pattern, and there is one region which especially highlights this change, and that is South East Asia.
As a group of nations, Asean includes the rich city state of Singapore, along with the fast developing nations of Malaysia, Indonesia and Vietnam.
Any visitor or tourist will attest to the change over the past two decades, with the huge development of shopping malls and consumerism, not just from the often sweating tourist, but increasingly from a more affluent population.
What should I do?
The obvious way to invest in such concepts are through some specialist funds looking at Asean or even a tracker of their markets. However there is another route which is of more interest to me. The Prudential is one of those wonderful old brand names that our parents will remember.
However in the UK, its profile has not been as strong, and the main reason for this is that the company deliberately refocused its future as a trusted, long-standing insurance company, away from the crowded western markets, to that of the fast-growing consumers of the East.
For some good exposure to the growth of the Eastern consumer and an investment in a rather conservative insurance business, then a direct holding in the Pru seems good value and quite timely.
Last July its share price peaked at over 1570p but has since fallen back to a tad over 1300p. This seems to me to be quite a good entry price for a good quality long-term investment. Also quite helpfully, for an Eastern investment, you can buy it on the London Stock Exchange where it is in the FTSE100. However, for a low cost exposure to these economies and their spending citizens then there is the iShares MSCI Emerging Markets Asia ETF.
Justin Urquhart Stewart co-founded fund manager 7IM and is chairman of investment platform Regionally.