Silver Economy – a Supertrend for companies and investors
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Silver Economy – seizing opportunities

The "Silver economy – investing for population aging" Supertrend at Credit Suisse is becoming increasingly significant. In essence, it revolves around global demographic trends, particularly the aging population. Read about how it creates both challenges and opportunities for businesses and investors.

The world is undergoing demographic change

On July 11, 2018, the United Nations’ World Population Day reminded us of the urgency of the most pressing population issues. One of the most powerful is, of course, population aging. The general assumption is that the world’s senior population will more than double between now and 2050, from slightly short of one billion to more than two billion. This will likely create plenty of challenges, but also a host of opportunities for companies accepting them.

a-look-at-the-development-of-the-silver-economy-supertrend

A look at the relationship between the working population and pension recipients

Source: United Nations/DESA Population Division

Following the Supertrend

Numerous market developments that have been observed since the first publication of our long-term investment themes, called Supertrends, support the investment thesis of Credit Suisse. On the medical side, companies are reporting strong growth in demand for medications used to treat age-related conditions. At the same time, the demand for senior housing and care facilities is unabated. In the insurance field, strong performance of offerings related to health and life insurance has been observed. Moreover, recent volume trends in the cruise industry as well as in health and beauty-oriented consumer companies prove the subtheme of senior lifestyle in the “Silver Economy” Supertrend.

Corporate activity confirms “Silver Economy” Supertrend

What is more, the investment case can be seen at the heart of the “Silver Economy” Supertrend validated by business development activities of companies active in the field.  First of all, there are two transactions worth noting in this context.

First, we recently saw Ramsay GDS, a French hospital and clinic operator, make an unsolicited bid for its Sweden-based rival Capio. The fact that the bid was unsolicited and would significantly add to Ramsay’s geographic reach is telltale of the scarcity value of such assets. It also shows the quest by companies to capture the demographic trend on a broad geographic basis.

Second, we note that, according to Bloomberg, Chinese insurance group Ping An is looking to acquire the Asian operations of Prudential, its British rival. Looking at the data, we are little surprised by the pursuit of this asset. The reason is that, of the major world regions, countries in Asia will likely experience the most dramatic drop in their support ratio, which is indicative of future insurance demand in those countries.

These two examples are but a small subset of business development actions that affirm Credit Suisse “Silver Economy” Supertrend.