Article

What drives the Asian consumer? – Experience

May 27, 2021
Mike Shiao
Mike Shiao
Chief Investment Officer, Asia ex Japan
What drives the Asian consumer? – Experience

As their income levels rise, Asian consumers have become increasingly engaged with a breadth of experiences from travel and fine dining to extreme sports to enrich their lives.

Despite the pandemic’s impact on the experience economy , we believe this remains a long-term growth story. Once consumers regain confidence, we believe these activities will bounce back quickly to pre-pandemic levels.

The evidence of this can already be seen in China. Thanks to relatively effective containment efforts in China, hotel occupancy rates and domestic flight passengers traffic rebounded to around 90% of 2019 levels by the end of August last year. Railway travel also shows a strong recovery. Meanwhile, South Korea has also seen a rebound, with department store sales already resuming as containment measures are relaxed. Air passenger numbers also appear to have bottomed out.

Figure 1: Korea consumption rebounded strongly
Figure 1: Korea consumption rebounded strongly
Source: LHS – MoTIE, Morgan Stanley Research as of 22 September 2020; RHS - CEIC, Morgan Stanley Research, 19 October 2020.

Beyond physical experiences, Asian consumers are also pursuing more experiences in the virtual world, such as through social media, live streaming and mobile gaming. This trend, as mentioned, is being accelerated by the pandemic. This saw us initiating a position in, iQiyi,  a leading video and entertainment platform in China in early 2021. The pandemic has led to high membership growth for the company, and we believe that its revenues are likely to remain strong going forward.

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Investment Risk

  • The value of investments and any income will fluctuate (this may partly be the result of exchange-rate fluctuations) and investors may not get back the full amount invested. As a large portion of the fund is invested in less developed countries, you should be prepared to accept significantly large fluctuations in the value of the fund. The fund may invest in certain securities listed in China which can involve significant regulatory constraints that may affect the liquidity and/or the investment performance of the fund.

Important Information

  • Data as at 30.04.2021, unless otherwise stated. This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. 

    Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.