Investors across Wall Street are facing a new world today.
War has erupted in Ukraine. Fears of a recession are mounting in the U.S. And corporate America has been sent reeling, with companies now trying to find their footing once again after a gangbusters period where many saw earnings explode. But that’s only part of it.
For Bank of America, there is a series of far deeper shifts taking place globally that investors need to wise up to. By 2030, for one, nearly four dozen cities around the globe will have at least 10 million inhabitants, escalating the threat to the climate. By 2050, there will more than double the count of people who are at least 65 years old. And by 2057, following years of falling fertility rates, the number of children globally is expected to top out at 2.1 billion before the world potentially reaches “peak people” seven years later.
“The world won’t look anything like it does today in years to come,” a group of Bank of America analysts led by head of thematic investing, Haim Israel, wrote in a June 8 report. “And it’s not all about global population growth (or decline)—it’s also about the rapidly changing composition of that population.”
It is all representative of what the Wall Street bank calls a “transforming world,” one that is bound to cause a “new world order” that stands to impact just about everything from cities to political regimes to, of course, companies. So, what’s an investor to do? Well, Bank of America has some ideas—50 to be exact. Here is a breakdown of some of the top themes from Bank of America’s note and the stocks that analysts see prospering, as a result:
The stocks for society’s coming age shake-up
Over the last half century, the world has been in a period of escalating growth that has led the number of people globally to more than double, according to Bank of America. And the population’s expansion is not yet done.
The United Nations has projected that the count of people very may well reach a peak of almost 11 billion by 2100, compared to about 7.9 billion today. However, a 2020 study conducted by researchers from the University of Washington’s Institute for Health Metrics and Evaluation found that, in fact, the global population may reach its highest level of 9.72 billion as soon as 2064—the same amount of years from now into the future as 1980 is in the past.
Perhaps the largest driver of the expected decline is a dramatic falloff in the global fertility rate, which, according to the UN, has plunged from 3.2 live births per woman in 1990 to 2.5 in 2019 and, by 2100, should sit at around 1.9. Bank of America, as a result, predicts a boom in business for companies dealing in fertility health benefits, assisted reproductive services, in-vitro fertilization technology, and family planning. Take Progyny, for instance. The New York-based company provides fertility benefits to “large, self-insured employers,” Bank of America notes, adding that it is the only publicly traded company of its type in the U.S. Bank of America also highlighted Jinxin Fertility, the leading provider of assisted reproductive services like in-vitro fertilization in China and the U.S., as well as Owlet, a company that sells infant-monitoring technology like a sock that parents can wrap around their child’s foot at night to monitor their heart rates.
It’s not just that the world isn’t having enough children, though. There’s also the fact that, thanks to advances in healthcare, better lifestyle habits, and managed care, society is getting older. The average life expectancy is set to rise from 72.3 years to 76.8 years by 2050, according to Bank of America. So, in the eyes of Bank of America analysts, healthcare staffing companies such as AMN Healthcare are bound to see a surge of demand, especially at a time when the industry as a whole is suffering from a labor shortage. Bank of America also highlights traditional global banks like UBS and JPMorgan Chase as potentially being primed for more room to run with the so-called greying population, considering the expected need for more wealth management services from older clients. Other benefactors include insurers like AIA, one of the largest life insurers in Asia, and Prudential plc, which Bank of America notes is sitting on an opportunity to expand its sprawl all across Asia and Africa considering the emerging middle-class and older populations in both markets.
The stocks for city watchers
The world has been coalescing around cities for 15 years now, and, while COVID-19 has opened up new possibilities for people to work from anywhere, people are still expected to pile within city limits for the years to come.
About 55% of the global population today lives in a city, Bank of America noted in the report. By 2050, about two-thirds of the global population is expected to be living in cities—with the lion’s share of that growth coming from Asia and Africa. For cities to be able to handle the influx of new residents, there is bound to be a massive infrastructure spend in the next decade. PwC estimates that globally it could be as much as $78 trillion.
One stock that Bank of America called attention to in particular was Helios Towers, which owns and operates telecommunication towers and other infrastructure across Africa and the Middle East. In Vietnam, Bank of America says Vinhomes Joint Stock Company, the country’s largest residential developer, may also benefit from the rising affluence among citizens, which could drive “an increasing need for formal housing, in a market that is chronically under-supplied.” On the consumer-facing side, the push into urban areas, Bank of America wrote, may also be a catalyst for more business for food delivery companies like Zomato of India and Grab in southeast Asia.
In the states, Bank of America called out UDR, a multifamily real estate investment trust, that operates apartments in markets like New York, Washington, D.C., and San Francisco. The bank is also seeing more opportunities for companies that are catering to newly minted suburbanites, such as Home Depot, given the “long-term trend of migration out of urban areas and into suburban and rural markets [that] has been accelerated by the pandemic,” the bank’s analysts wrote.
The stocks for Gen C
Imagine not remembering the heights of the COVID-19 pandemic, or driving, or using cash. Well, if Bank of America’s right, that’s the future awaiting the youngest in society today: Gen C.
Born after 2016, Gen C is already 700 million strong and bound to reach 2 billion by 2025, according to the bank. And while that will make it ultimately smaller in size than the oft-discussed Gen Z, the analysts wrote that Gen C is positioned to become the first “to live in harmony with technology amid ubiquitous connectivity.” What does that mean? “A ‘cashless, shopless, driverless, potentially collegeless’ generation, as they change attitudes to money, work, mobility and education in the advent of new disruptive technologies,” the Bank of America analysts wrote.
“Also, Gen C could be the first generation to ‘cheat death’ and achieve immortality and live in a net zero world,” they added.
Whether there is a human alive today who will never die, who knows. But, for investors, Bank of America does see some clarity already emerging around companies that are positioning themselves to become pillars in society for future generations. Among them: Roblox, the video gaming company that is making an aggressive push into the immersive digital known as the metaverse, Coinbase, the leading cryptocurrency exchange in the U.S. that is trying to become a gateway to the next iteration of the Internet, and even the 98-year-old Walt Disney Co., which Bank of America analysts wrote has the potential to become “a key stakeholder in the metaverse, however this new emerging area evolves over time.”
“It is our view that ‘content is king’ and content/IP will serve as the key attraction in consumer adoption of these new virtual spaces,” the analysts wrote. “[Disney] will likely have an advantaged positioning to capitalize on this with their roster of iconic franchises and IP to help create these new virtual worlds.”
Here’s the full list of the 50 stocks that Bank of America sees benefitting from the globe’s ever-shifting demographics:
- AIA Group Limited
- Airtel Africa Limited
- AMN Healthcare
- Amundi SA
- ASGN Inc.
- Bank of Montreal
- Bidvest Group
- Block Inc.
- Coinbase Global Inc.
- D.R. Horton Inc.
- Grab Holdings
- Helios Towers PLC
- Hologic Inc.
- IDP Education
- Jinxin Fertility Group Limited
- JPMorgan Chase & Co.
- LEG Immobilien
- Masan Group
- Mr Price
- MTN Group
- Nihon M&A Center
- Owlet Inc.
- Progyny Inc.
- Prudential PLC
- Reliance Industries
- Roblox Corp.
- Sea Limited
- Teleperformance SE
- The Home Depot Inc.
- Torrid Inc.
- UDR Inc.
- Upwork Inc.
- Victoria’s Secret & Co.
- Vinhomes Joint Stock Company
- Vonovia SE
- Walt Disney Co.
- Zomato Limited
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