27 October 2016
Older people are expected to fuel an explosion in demand for medical and healthcare services. Photo: Xinhua
Older people are expected to fuel an explosion in demand for medical and healthcare services. Photo: Xinhua

Why the gray-hair theme is a diversification opportunity

About two billion people will be 60 years and older by 2050.

In the United States, most of them (66 to 74) have family wealth more than double those of people under 45.

Older people in the European Union spent 30 percent more than young families during 1988 to 2010.

Trends in the aging population show that older people have longer retirement years, resulting in increased demand for healthcare, entertainment and other services.

In the healthcare sector, pharmaceutical companies, medical equipment makers, medical care and health services providers have the brightest outlook.

That’s because demand for medical examinations, diagnoses and treatment products and services will be stronger.

Technology innovation in these areas will fuel growth.

Many countries see technology innovation as an emerging economic driver.

US spending on aging-related items will account for 20 percent of gross domestic product by 2021.

Meanwhile, China has replaced Germany as the third largest market for pharmaceutical products and is expected to overtake Japan anytime soon.

The aging population pays attention to personal care.

In 2013, older Americans spent about US$3 billion on beauty products and services.

Last year, Europeans over 60 spent nearly 90 euros (US$98.30) on nearly five items of beauty products.

A major skincare brand has been serving this market exclusively for the past 10 years.

Its high-end youth preservation products have contributed to a large chunk of revenue.

In addition, demand for funeral services is increasing, driving up costs.

In 2012, the average cost of a funeral was US$7,000, up from US$1,000 in 1971.

The world’s biggest funeral service provider has seen its share price increase150 percent in the past three years.

Profit was up 14.3 percent in the first quarter from the same period a year earlier.

The “gray-hair” theme is a good diversification opportunity.

This article appeared in the Hong Kong Economic Journal on Nov. 4.

Translation by Myssie You

[Chinese version中文版]

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Head of Fund Distribution, Hong Kong, Amundi Hong Kong Limited

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