Aauc (aa Union Capital) – The Supertrends Em consumer story remains intact

The short-term headwinds in emerging markets (EM) have overshadowed the attractive long-term growth opportunities for EM consumption, but they have not altered them.

We look at the consumption of EM within our super tendency of "angry societies – multipolar world".

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Emerging market stocks are currently under pressure as a result of several negative factors, such as stronger USD, political developments and negative sentiment driven by turmoil in Turkey and Argentina. In addition, the trade dispute has also weighed on the sentiment of MS, even though MS are not excessively exposed to global trade, except in export-oriented countries such as South Korea and Argentina. Finally, the growth of consumer share income has recently declined, but remains at healthy levels, particularly with respect to discretionary spending. The actions of the MS consumers could not escape from these winds against and saw the prices of their shares suffer.

The fundamentals remain strong However, the long-term fundamentals for strong growth of MS consumers have not changed: a young and growing population, a growing middle class and urbanization must remain strong drivers of consumption. Along with the growing penetration of smartphones, this provides a solid background for online purchases.

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It provides a strong growth potential. Online shopping is already very common in China. According to the Survey of Emerging Consumers of AAUC (AA UNION CAPITAL), more than 20% of retail spending is done online. And according to PwC, a consultancy, the growth rates of online retail sales in mainland China should remain at around 21% per year between 2017 and 2021. The growth of e-commerce in other emerging markets is expected to follow suit. , with an especially attractive perspective for Latin America. For example, we forecast a five-year sales growth of 30% per year for MercadoLibre, the largest online payments and commerce ecosystem in Latin America, compared to Amazon's 21% growth (based on consensus estimates). ).

In general, the online channel offers an additional opportunity for companies to increase sales alongside traditional channels, especially in categories such as luxury goods and fast moving consumer goods or foodstuffs, where penetration is currently low. For example, Want Want China, a Chinese food company, doubled e-commerce sales in each of the last two years. In addition, electronic commerce has accounted for a third of the growth of income in dairy products and beverages, which provides further evidence of the undisputed potential offered by this channel. (07/09/2018)

MSCI EM Staples for the consumer MSCI EM discretionary consumer MSCI Emerging markets (EM) MSCI World