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Asia: An Overlooked Opportunity Cover Photo

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Our guide for long-term investors to help demystify and evaluate the benefits of making a meaningful allocation to Asian investments.

Asia stands apart

While the rest of the world continues to struggle with low levels of economic growth, Asia stands apart

Projected GDP growth in 2021

0.0%

Asia

0.0%

Latin America

0.0%

U.S.

0.0%

Europe

Source: World Economic Outlook, 
January 2020 estimates

Asia will account for:

Half of 
global GDP by 2040

Source: McKinsey, 2019


Half of the 
world's population by 2050

Source: United Nations, 2019

Two-thirds of all 
middle-class spending by 2030

Source: Global Economy and 
Development at Brookings, February 2017

Missing the opportunity:
Too little Asia

Exposure to Asia has typically come from benchmarks which underrepresent the region

0%

A typical investor portfolio with a 
35% international allocation…

0%

would have a 6% allocation to 
Asia ex Japan if benchmarked 
to MSCI ACWI ex U.S.*

0%

… and only 2% if benchmarked to 
MSCI EAFE^

Source: iShares.com, February 13, 2020

  99% Less than 1% of the mutual fund market in the US is dedicated to Asia

Source: Strategic Insight, December 31, 2019

Missing the opportunity:
The wrong kind of Asia

Tech Travel Health care E-Commerce Banks Exporters Heavy industry

Banks, Exporters, Heavy Industry

Indices are heavily weighted in older
parts of the economy…

Tech, Travel, Health, E-Commerce

… neglecting consumption and services that
represent a growing part of the Asian economy

The right kind of Asia

Consumer spending

Rising consumption rates across Asia are expected to lead to a sharp increase in discretionary spending on non-essential purchases

Asia Pacific Region

Global consumption projected growth rates: 
2015-2030

0% U.S.
0 Latin America
0 Western Europe
0% Asia Pacific

Source: Mckinsey & Company: The global consumers to watch, April 2016

China

Rising discretionary spending: Projected annual growth rate, 2010-2020

Discretionary spending
Personal items, recreation, education, transport, communications
0.0%
Semi-necessities
Apparel, health care, household products

0.0%
Necessities
Food
0.0%

Source: Mckinsey & Company, Why China's consumers will continue to surprise the world, May 2015

Health care

Asia is expected to experience a sharp increase in health care spending, with countries 
like India leading the pack

Asia Pacific Region

Expected annual average increase in health care, 2017-2022

0.0%
 

Asia Pacific region

0.0%
 

North America

Source: Deloitte Global Healthcare Outlook, 2019

India


0%

16% Growth rate for 
India’s healthcare spending 
projection (2008‐2022)

$0 
US billion

$100 US billion Indian 
biotechnology including 
biopharmaceuticals market 
size is expected to grow to 
US$100 billion by 2025

Source: India Brand Equity Foundation, 2018

Travel

Rising personal wealth and spending on leisure are increasing intra Asia travel

Japan

South KoreaChinaIndiaJapanPhilippinesIndonesiaSingaporeMalaysiaThailandHong KongTaiwanVietnam

Source: Japan National Tourism Organization

Japan 0.0
million
Japan drew 31.2 million 
overseas visitors in 2019
2010 x0 This is more than triple the 8.6 million overseas visitors it saw in 2010
Flights 0.0
million
Total visitors came 
from Asian countries

E-Commerce

Smartphone ownership is on the rise across the continent, leading to a huge opportunity 
for tech-related industries

Asia Pacific Region

Internet users who own a smartphone (Q1 2019)

0%
0%
0%
Asia Pacific Europe North America

Source: GlobalWebIndex


Spending $0
US trillion
Global e-commerce 
spending from Asia in 2016
2019 $0.0
US trillion
In 2019, that 
number grew to 
US$2.3 trillion…
Global eCommerce 0 … representing 
over 64% of global
e-commerce spending

Source: eMarketer

Discover the 
power of Asia

At Matthews Asia, we believe that many investors are under-allocated to the region and are therefore missing out on attractive investment opportunities.

For over 25 years, we have pursued an active, fundamental approach to investing in Asia, resulting in portfolios with an average active share of 85% and holdings that we believe represent a better exposure to the future growth of the region.

Put the power of Asia in your portfolio with Matthews Asia.