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Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

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Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

The-rise-of-the-Chinese-middle-class-consumers

The rise of the Chinese middle class consumers

Daniel L. Chan

By Daniel L. Chan

Head of Citi Investment Management – Asia Pacific

April 18, 2018Posted InInvestments and Investment Strategy

In recent years, China has experienced a stock market crash, slumping currency, debt issues, and concerns over a pension crisis. Volatility in the region may have led to investor caution, but we believe the outlook for China - the world’s second largest economy - is promising, driven by the emerging middle class’ continued consumption.

Presently, China’s population includes 800 million working class people with approximately 1.4 million people earning over US$500,000 a year; 146 million people earning on average $11,700 a year, and 236 million earning on average $5,800 a year. The two lower groups are experiencing rapid wage growth of 10% per year, representing significant consumption power for the Chinese economy. Figure 1 shows the changing dynamics of China’s middle class.

 

Figure 1: Changing dynamics of Chinese middle class

 

We are currently finding opportunities in consumption sector, like the Chinese auto industry. With 25 million car sales per year, China is the largest car market in the world. For comparison, 17.5 million cars are sold annually in the US. Presently, there are only 100 cars per 1,000 people in China, whereas there are 800 cars per 1,000 people in the US – Figure 2. This illustrates the tremendous growth potential of the automotive industry as the middle class becomes wealthier and, as a result, buys their own cars.

 

Figure 2: Middle class growth drives secular opportunities

 

Although China’s emerging middle class benefits many global brands, it is important to note that it also provides a huge boost for domestic brands, as long as the domestic brands can offer high quality in its products. Chinese car manufacturer Geely purchased Volvo in 2009 and over the past five years has leveraged ownership of the Swedish luxury car maker to make Geely a top three brand in the Chinese market, outselling most of Korean and Japanese manufacturers, which used to dominate in the past. This is a prime example of the Chinese consumer’s preference for domestic brands.

We see strong potential for a bright Chinese future and encourage investors to further research and explore investment opportunities in the region. We believe globally diversified portfolios have the potential to lead to better investment results as diversification across regions and asset classes may help mitigate the impact that periodic regional difficulties can have upon performance.

 

Disclosures

International investing entails greater risk, as well as greater potential rewards compared to US investing. These risks include political and economic uncertainties of foreign countries as well as the risk of currency fluctuations. These risks are magnified in countries with emerging markets, since these countries may have relatively unstable governments and less established markets and economics.

Securities discussed are for illustrative purposes only.