Innovative Trends in the Emerging Markets
Stepping out onto the global landscape, and looking towards the Emerging Markets, can lead to great investment opportunities for investors. Given this environment, Economics Global takes a look at some innovative trends in the Emerging Markets that investors should focus on.
“Where There is a Will, There is a Way”: COVID-19 Fuels Emerging Market Trends
As global markets continue to make their recovery from the COVID-19 pandemic, market participants continue to be infatuated with global technology giants, as they continue to offer refuge for investors in light of the ongoing health crisis. So far this year, market valuations for some the world’s largest tech and e-commerce giants have risen to new levels, albeit with some volatility in recent months.
Since the emergence of COVID-19, the rate and adoption of digitized processes has increased substantially among both consumers and businesses. This can be seen in the fact that on the consumer side, such commerce trends are seeing more consumers shift their consumption away from traditional brick-and-mortar stores, and purchase more goods and services online. On the corporate side, we see more businesses embracing digitized processes, ranging from remote working solutions for their employees, to using cloud storage functions for their operations.
Given these trends, we continue to see Emerging Market countries be at the forefront of such innovative processes and developments.
“Innovative Spark” – Emerging Market Countries at the Forefront of Innovation
As the COVID-19 pandemic has fast-tracked some of these emerging trends, we believe Emerging Market economies are well-situated to benefit from these transformative tailwinds, especially those closely aligned with current macro trends and emerging socio-economic themes.
Given this backdrop, we’ve observed two noticeable trends currently unfolding within the Emerging Markets:
- Premium Consumption Behaviour
As the COVID-19 pandemic has disrupted how people commute to work, permanent infrastructure changes in many large, densely-populated Emerging Market cities are making electric bikes (“e-bikes”) a key strategy to tackling climate change, as well as providing affordable transportation options for their residents. E-bikes, which run on battery-powered motors to assist pedalling, have become so popular in recent years, they have even outpaced public transportation in some areas. While e-bikes are generally cheaper than traditional automobiles, they are more expensive than traditional bikes, thus making them appealing to middle-class and high-income consumers.
This is an example of a larger trend playing out throughout Emerging Market countries, where we are seeing the emergence of “premium consumption behaviour” among consumers. As many of these economies continue to become more industrialized, and median incomes continue to rise, we expect to see more of this type of consumer behaviour spread out into other industries and sectors, such as home appliances, automobiles, real estate, textiles, and apparels, to name a few. We believe this to be a very strong trend going forward, because as more consumers move into the middle class, these consumers will begin to purchase goods and services in accordance with their psychographic characteristics, such a brand name, lifestyle, goals, and values, as opposed to making purchases solely based on price.
- Wearable Healthcare Technology
The emergence of wearable healthcare technologies stems from the intersection between COVID-19 detection and prevention, and the increased use of wearable technology. The pandemic has prompted many people to be aware of their overall health, increasing the demand for wearable technology, such as smartwatches and fitness bands, that tracks and monitors health information, such as blood pressure, respiratory, and heart rates. In fact, such wearable technologies continue to become more sophisticated and advanced, as these devices continue to include specific medical features for their users.
We see this trend continuing to pick up in the Emerging Markets, as market demand for wearable healthcare technologies in large countries such as India and China, continue to soar. This demand is primarily driven by economic growth and development, an increase in societal health consciousness, and an ageing demographic (specifically in China).
As a result, both the wearable technology and healthcare industries in the Emerging Markets, are currently undergoing a rapid transformation facilitated by changing technological advances, market trends, and consumer behaviour. The introduction of digital technology solutions will improve both the efficiency and quality of healthcare in Emerging Markets, which in turn will further contribute to socio-economic development among these countries. We believe in the near future, wearable healthcare technologies will help to fill the gap in the shortage of medical resources afflicting some Emerging Market countries, by delivering reliable healthcare information straight to the consumer.
Going forward, we see Emerging Market innovation offering great long-term investment opportunities for (patient) investors. We think Emerging Market countries and companies are primed to be at the forefront of these developments, as they tend to be quite agile in their operations. This is why we believe investors should keep an eye on these trends in the years to come.
© 2020 Economics Global Inc.
Any views expressed here are those of Economics Global Inc. as of the date of this publication, are based on available information, and are subject to change without notice. This document does not constitute investment advice.
The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.
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