Size of Asian Consumption Boom Expected to Surprise on Upside, According to Newton

BNY Mellon Investment Boutique Sees Rising Incomes, Changing Demographics Driving Powerful Trend

Dec 17, 2010, 07:47 ET from BNY Mellon

LONDON and NEW YORK, Dec. 17, 2010 /PRNewswire-FirstCall/ -- Rising incomes, changing demographics, a high savings rate, and the changing psychology of Asian consumers could ignite an unprecedented consumption boom in Asia that will be more robust than the consensus outlook, according to a report by Newton*, a London-based investment boutique of BNY Mellon Asset Management.  The report is included in BNY Mellon Asset Management's global outlook for 2011.

"There are 500 million individuals rapidly moving up the income curve with aspirations to spend more on products and services ranging from low-end staples, such as diapers, to luxury goods such as designer clothes and luxury cars," said Jason Pidcock, investment leader of Asian equities for Newton, who authored the report.  "Rising earnings, wealth levels and confidence in the economic outlook are contributing to the declining savings rates and higher consumption."

The Newton report notes that changing population dynamics will be a key driver of rising consumption.  China, for example, now has a much lower percentage of the population in the very young age brackets than it did in the 1980s, resulting in a lower percentage of the population who are financially dependent on those in the prime working ages, according to the report.  

This low dependency ratio will enable Chinese workers to spend more of their earnings on discretionary consumption, the report notes.  Chinese government programs for healthcare and social housing are creating a safety net for the population, which also is expected to lower the requirement for the high savings rate in the country and freeing up more money for discretionary purchases, according to Newton.

"Having already seen the impact of China's productive power over the last decade, we believe the world now will begin to feel the force of its consumptive power, especially as the vast population in the rest of the region follows China's lead up the income and consumption curves," said Pidcock.

Notes to Editors:

Newton* is a London-based global asset management subsidiary of The Bank of New York Mellon Corporation and part of BNY Mellon Asset Management. With assets under management of more than $71 billion, including assets managed by Newton Investment Management Limited as dual officers of Newton Capital Management Limited and The Bank of New York Mellon, Newton's group of affiliated companies provides a broad range of award-winning investment products and services to individuals, pension funds, charities and corporations. News and other information about Newton is available at www.newton.co.uk.

BNY Mellon Asset Management is the umbrella organisation for BNY Mellon's affiliated investment management firms and global distribution companies. Information about BNY Mellon Asset Management is available at www.bnymellonam.com.

BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets.  BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has $24.4 trillion in assets under custody and administration and $1.14 trillion in assets under management, services $12.0 trillion in outstanding debt and processes global payments averaging $1.6 trillion per day.  BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK).  Additional information is available at www.bnymellon.com.

*'Newton' refers to the following group of affiliated companies: Newton Investment Management Limited, Newton Capital Management Limited, Newton International Investment Management Limited, Newton Capital Management LLC and Newton Fund Managers (CI) Limited. Assets under management include assets managed by all of these companies except Newton Capital Management LLC, which provides marketing services in the U.S. for Newton Capital Management Limited.  Except for Newton Capital Management LLC and Newton Capital Management Limited, none of the other Newton companies offer services in the US and Canada. Newton Capital Management Limited is an investment management firm authorized and regulated in the United Kingdom by the Financial Services Authority in the conduct of investment business and is a wholly owned subsidiary of The Bank of New York Mellon Corporation.  Registered in England no: 2675952.  Newton Capital Management Limited is registered in the United States as an investment adviser under the Investment Advisers Act of 1940. Unless otherwise stated, all information source BNY Mellon Asset Management as at 30 September 2010. This press release is qualified for issuance in the UK, US and Canada and is for information purposes only. It does not constitute an offer or solicitation of securities or investment services or an endorsement thereof in any jurisdiction or in any circumstance in which such offer or solicitation is unlawful or not authorised. This press release is issued by BNY Mellon Asset Management (US & Canada) and BNY Mellon Asset Management International Limited (ex-US/Canada) to members of the financial press and media and the information contained herein should not be construed as investment advice. Past performance is not a guide to future performance. Registered office of BNY Mellon Asset Management International: BNY Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England no. 1118580. Authorised and regulated by the Financial Services Authority. A BNY Mellon Company(SM)

SOURCE BNY Mellon



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