China Baby Boom Wagers Go Bust on Child Cost Burden – Bloomberg 08-20-14

Salient to Investors:

  • Living costs in China are deterring couples from having more than one child as less than 3 percent of the 11 million couples applied for permission by the end of May.
  • The UN said China’s fertility rate of 1.66 versus the 2.1 needed to sustain population levels means its population will start falling by 2030.  The UN said the number of Chinese over age 60 may rise to 437 million by 2050 as the population drops to 1.38 billion from a peak of 1.45 billion in 2030.
  • Credit Suisse says raising a child in China from birth through age 18 costs 43% of average annual household income.
  • Zhang Gang at Central China Securities said baby-related stocks have room to fall further because of over speculation about a baby boom.
  • Economists expect China GDP to rise 7.4 percent in 2014, the weakest rate since 1990.
  • Ronald Wan at Asian Capital Holdings said people tend to have a second child when the macro-environment and property prices are more favorable and they have job security.
  • Mark Mobius at Templeton Emerging Markets said declines in some baby-related shares have reduced valuations to reasonable levels and investors should not expect birthrates to rise overnight as this is a longer-term trend.
  • A 2012 survey of pay by the Japan External Trade Organization found the base monthly salary for a factory worker in Beijing was $466 versus $145 in Hanoi.
  • Hao Hong at Bocom Intl said China’s rapidly aging population and declining birth rate will soon produce wage pressures, faster inflation and slower productivity growth, and even relaxing the birth-control act will not help reverse the trend anytime soon.

 

Read the full article at  http://www.bloomberg.com/news/2013-09-19/asset-bubbles-found-by-finnish-economist-inspired-by-grandfather.html

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