• Old but gold. This report attempts to analyse the dynamic shift in the population age profile across Indonesia, Malaysia, Singapore and Thailand. In view of the falling birth rates and longer life expectancy across ASEAN, the population of this region could be labelled as one that is ageing by 2030. We believe this could present potential investment opportunities, as businesses and healthcare service providers can gradually cater their products and services towards the growing aged populace.

• Structural demographic shift. The global portion of those aged 65 years and above is projected to rise to 16% of the total population by 2050, from 10% in 2022, according to the United Nations (UN). Key factors behind this growth: Higher life expectancy rate, drop in the fertility rate, longer life expectancy rate for women, coupled with the growing portion of women (55.7% of the global population) vs men (44.3% of the global population). China, the world’s most populous country, now has a low birth rate of just 6.77 births per 1,000 persons in 2022, from 7.52 per 1,000 persons in 2021.

• Redistribution of spending patterns. The share of consumers aged 65 years and above is expected to outpace that of the other age groups, at 65.6% in 2020-2030. This segment will also make up 13.7% of the global population by 2030F, from 11.7% in 2022. The shift in consumer class would also mean a redistribution of consumer spending behaviour, as consumers in the senior age group may likely have greater purchasing power. The term “silver economy” covers products and services delivered to and consumed by people aged 60 years and over. Asia is expected to see a rapid growth of the silver economy, with annual consumer spending from senior citizens in China expected to triple from USD750bn to USD2.1trn over 2020-2030.

• What does it mean for ASEAN? The global growth of the silver economy is expected to shift from the Organisation for Economic Co-operation and Development (OECD) economies to Asia in the next decade. According to Ageing Asia, Asia Pacific’s silver economy market size is estimated to grow at a 2020-2025 CAGR of 7.3% to USD4.6trn. According to Deloitte Monitor, there will be large differences in silver consumer spending across the top six sectors in different countries (Figure 55). This should create opportunities in aged care services and lead to advancements in healthcare services, given the increase in health complications as well as public infrastructure to accommodate this demographic change in the region.

• Ageing ASEAN stock ideas. Our actionable ideas are divided into two categories: Direct and indirect proxies. Companies categorised under the direct category are basically healthcare service providers, while the indirect proxies are companies involved in distributing and manufacturing medical equipment, health supplements and private nursing home operators. Direct proxies: KPJ Healthcare, Raffles Medical, Bangkok Chain Hospital, Bangkok Dusit Medical Services, Medikaloka Hermina and; Indirect proxies: LKL International (LKLI MK, NR), ComfortDelGro, Kalbe Farma, Mega Lifescience, First Real Estate Investment Trust (FIRT SP, NR) and Econ Healthcare Asia (ECON SP, NR).

Source: RHB Securities Research - 08 Nov 2023