beyondbrics

In emerging markets, things get made. China has long enjoyed (or endured) the moniker ‘workshop of the world’. But perhaps China will soon be better known as the wallet of the world, if Morgan Stanley’s latest projections on global spending power are anything to go by.

What we see from the report is that in the next two years, the number of households in Bric countries with an income over $10,000 a year will surpass that of both the eurozone and the US, before rocketing off into the stratosphere. Spending power is moving south and east, and it’s doing so at blistering pace.

So how can investors benefit from it? MS looks at the Chinese market in particular, and picks out a number of plays in a number of sectors – mainly financial services, property, and consumer stocks

But what if buying emerging market equities seems too much trouble (especially in China)? For those without itchy feet, there are also some western-listed recommendations. Again, consumer stocks look set to benefit – MS points to Nike, Kraft, Yum!, H&M, Unilever, and L’Oreal, to name just a few. By picking the right stocks – global companies aimed at middle incomes – investors can enjoy the fruits of the shifting economic world from the comfort of their own stock market.

That might not seem like rocket science. But when you see the flight path of global wealth, it pays not to ignore even the simplest of strategies. Just ask a car company (see chart).