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China's Millennial Monetization Is Coming

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China's Millennial Monetization Is Coming

A new report by Morgan Stanley analyst Joshua Lu took an in-depth look at how the maturation of more than 415 Chinese Millennial consumers will drastically change global consumer market dynamics for years to come.

The size of the demographic is staggering, representing 31 percent of the total population of China and more than the entire combined working population of the United States and Europe.

The Numbers

According to Lu, the aggregate income of Chinese Millennial consumers will grow by $3 trillion over the next decade. “To put this in context, such an increase in spending power would amount to more than half of the estimated US$5tn ($5 trillion USD) that would be added to U.S. total private consumption expenditures over the coming decade if the U.S. were to sustain the 3.7 percent CAGR that it achieved over the last 10 years,” he added.

Related Link: An ETF That Gains As China Loses

Unique Generation

Lu explained that Millennials are a unique Chinese generation in that they are the first generation to grow up in a relatively stable political environment in China. In addition, they are the first generation in China that has grown up in a world in which China has endured significant global economic connectivity with the rest of the world.

What Are They Buying?

According to Lu, older Chinese Millennials have been driving demand for children’s products, property and automobiles. The under 30-year-old segments remain a key battleground for retailers, and the younger Millennials’ connected lifestyle poses another unique retailing challenge.

Stock Picks

In the report, Morgan Stanley named several domestic Chinese companies and global companies that are well positioned to capitalize on the explosive spending growth by Chinese Millennials.

Top names include:

  • Monster Beverage Corporation (NASDAQ: MNST)
  • Hershey Co (NYSE: HSY)
  • Mondelez International Inc (NASDAQ: MDLZ)
  • Alibaba Group Holding Ltd (NYSE: BABA)
  • Apple Inc. (NASDAQ: AAPL)
  • Pandora Media Inc (NYSE: P)
  • Tiffany & Co. (NYSE: TIF)
  • China Mobile Ltd. (ADR) (NYSE: CHL)
  • Nike Inc (NYSE: NKE)
  • Starbucks Corporation (NASDAQ: SBUX)

Image Credit: Public Domain

Latest Ratings for AAPL

DateFirmActionFromTo
Apr 2021Morgan StanleyMaintainsOverweight
Apr 2021Morgan StanleyMaintainsOverweight
Mar 2021UBSUpgradesNeutralBuy

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