ALTU story - Capturing future growth
27 May 2019
Over the first decade of its life, ALTU has demonstrated its effectiveness but what is the scope for
the region – and the strategy – to thrive in the future?
A region evolving
It is likely Asia's growth will continue to outstrip western developed markets by a comfortable margin. While our focus is
first and foremost on the stock level, there are multiple, secular drivers which will play out over a number of years:
Consumption - Employment at, or close to, full employment across most of Asia and rising disposable
income is fueling consumer spending. Almost 90% of the next billion people to enter the middle class
globally, will be in Asia.1
Trade - Asia's biggest trading partner is now itself. The region is seeing the benefits of proximity of markets,
high economic growth, a broadening of manufacturing bases and lower trade barriers. And, as it opens up
further this will unleash even more opportunities.
Innovation - Asia is a hub of global innovation. It is home to world leaders in consumer electronics,
semiconductors, social media and e-commerce, which are continuing to invest significantly in research
& development in areas such as artificial intelligence and robotics.
Infrastructure - Growing populations and increasing urbanisation have led to a large infrastructure gap.
It's estimated that developing Asia will need to invest US$1.7 trillion a year up to 2030 to continue growth
momentum, eradicate poverty, and respond to climate change.2
1 Source: Statista, World Data Lab, 2017. 2 Source: Asian Development Bank, 2017.
How these drivers overlap
The profound impact of technology
Technology is having a transformative effect on Asia’s consumers. One particular area which is hard to
measure accurately, but nonetheless significant, is how advances in digital technology can boost net wealth,
without any increase in overall household income. The rapid development of e-commerce, for example, has
led to increased disintermediation across sectors, shortening the supply chain between businesses and
consumers, thus reducing the cost of goods & services and increasing disposable incomes.
technology is leading to greater financial inclusion, bringing a new generation of consumers into the formal
An ever-changing growth profile
Countries within Asia operate across a large spectrum of development phases and understanding how they
operate together is hugely beneficial. At one end of the scale is the more agrarian economies and low value-added
manufacturing, the other being a more mature developed-market economy.
China is currently around the midway point, as it makes the shift from a manufacturing-led, to a consumption-led
economy. Countries including India and Indonesia are at the lower reaches of the scale.
Increasing trade and greater cooperation across the region is sowing the seeds for further economic
development. For example, China’s investment in robots and factory automation is promoting the
advancement of the manufacturing industries in frontier markets such as Vietnam as it is outsourced.
The increased investment comes with job creation and infrastructure development.
Innovation in Asia (R&D as a percentage of GDP)
Source: World Bank and World Development Indicators over periods from 2013-2017. Taiwan figure from National Bureau of Statistics of China, Taiwan National Statistics.
Asia is taking off
Ongoing investment in aviation infrastructure, increased cross-border trade and rising disposable incomes in
Asia are fuelling a rise in passenger and cargo air traffic. Forecasts from Boeing and Airbus show notable
expansion of aircraft fleets in Asia. There is currently low passport ownership across emerging Asian
Leisure travel spending tends to follow a path that has been repeated globally – as incomes rise, people first
take vacations in their own country. As incomes rise further, in big countries they will travel to nearby
provinces & regions within country or, for inhabitants of small countries, neighbouring countries. Then, travel
becomes more expansive, first to other countries within the global region and then truly global.
This rise will require further investment in infrastructure. For example, for China to meet its 10-year airport
plan it will need to build 40 airports from end 2018 levels.