On the streets of Hong Kong, there are quite a few convenience store and restaurant waiters who are white-haired and slow to move. In order to ease the burden on their children, some elderly people in Hong Kong have to wear work clothes, making their lives less shabby.

The aging population of Hong Kong is a microcosm of developed countries and regions currently facing population structure problems. The elderly population of developed countries such as Japan, Italy, and the United Kingdom is also testing the country's social security capacity.

Looking at the level of economic growth and population aging, China is very similar to Japan in the 90s of the last century: the economic growth rate slowed, and the proportion of people aged 65 and over rose at an accelerated pace. Aging is becoming a major trend that is changing the entire macroeconomic structure.

An aging society is arriving at an accelerated pace

On May 11, China's decennial population census data was finally revealed. Although the public already had psychological expectations about China's population structure, public concerns about the country's population structure did not abate after the results were released.

Because this is an old account left to us for historical reasons, we have now also entered the stage of compensating for old accounts.

According to the results of the 7th population census, China's current total population has reached 1,412 million, which still surpasses India and continues to sit at the top of the most populous country.

There are two most prominent points in the Census data. One is that the population growth rate is declining; the second is that the number of people aged 65 and over is rising at an accelerated pace.

China's population growth rate in 2020 slowed to 5.38% compared to 2010, and the average annual growth rate fell to 0.53%, down 0.04 percentage points from the previous 10 years, a new low since China began organizing population censuses in 1953. But on the other hand, contrary to the trend of population growth, the aging trend in our country is accelerating.

In 2020, the proportion of people aged 60 and above in China exceeded 18.7%, while the proportion of people aged 65 and above increased to 19.64 million, accounting for 13.5% of the total population, a sharp increase of 4.6 percentage points over 2010.

The current trend of aging in China is very much like Japan since the 90s of the last century. Japan, which began in that era, experienced an embarrassing phase of declining economic growth and accelerated aging of the population.

Over the past ten years, the proportion of China's elderly population in the total population has been rising at an accelerated pace. However, since the sixties and seventies of the last century were the peak period for the number of newborns in China, this proportion has increased rapidly in recent years.

According to the United Nations statistical standards, the proportion of people aged 65 and over is above 7%, which is mildly aging, while the proportion above 14% is moderately aging. China has already entered a mildly aging society in 1990. As the aging trend has accelerated in recent years, 2020 is already close to the warning line of moderate aging.

This trend of population aging is similar to Japan's in the 90s of the last century and the first 10 years of the 21st century. Until now, Japan's aging population has continued to increase. In 2019, the proportion of the aging population reached a high of 28%, making it the country with the worst aging population in the world.

According to World Bank data, developed countries such as Japan, Italy, the United Kingdom, and France rank among the highest in the world in terms of aging. The proportion of people aging in 2019 was around 20%, while China ranked tenth in 2019 with a proportion of 12.6%.

Considering that there were more than 20 million newborns per year in the sixties and seventies of the last century (as shown in the chart below), and that they have not yet reached the age of 65, China's elderly population will show a faster upward trend in the next 5 years.

On the other hand, although the proportion of the child population in our country has picked up, the pace has been slow. In 2020, the proportion of people aged 0-14 increased by 1.35 percentage points compared to 2010, lower than the 5.44 percentage point growth rate of the population aged 60 and above during the same period.

Based on this, in the next few years, the growth rate of China's elderly population will far exceed the growth rate of the number of newborns, and it is expected that the degree of aging will also become more serious. According to the report on the development of China's aging industry, it is estimated that China's aging level will reach 30% by 2030. Judging from this ratio, it is clear that the trend in the next ten years will be faster than in the previous ten years.

What are the effects of aging?

After a person enters the age of 65, they often lose their ability to work normally and are unable to continue to create value for society. This will undoubtedly increase the burden on society.

French philosopher and sociologist Auguste Comte said that population is the fate of a country.

As for the impact of aging on economic structures and industrial institutions, Japan since the 90s is a precedent we can refer to, because the impact of population structure on the overall macroenvironment knows no boundaries.

Overall, in the context of aging, aging limits overall social demand, reduces production efficiency, and increases financial burdens. In these areas, Japan is under great pressure.

Judging from the GDP brought about by Japanese household consumption, the growth trend of this data fell into a slow growth situation since the 90s of the last century, and lost the momentum of rapid growth in the 80s. However, starting in the 90s, it was a period when the level of aging in Japan was rising at an accelerated pace.

The slowdown in the growth rate of domestic consumer demand has brought about fundamental changes to the Japanese industrial structure. Among them, manufacturing is one of the industries that have been hit the hardest. From the 90s of the last century to around 2014, the overall amount of GDP brought about by the Japanese manufacturing industry showed a downward trend, falling by nearly 1/4 from 1997 to 2009. Then, under the slow recovery of the global economy and Japan's aggressive overseas strategy, the Japanese manufacturing industry picked up.

However, the real estate industry is also deeply affected by aging, because when you get older, you don't need that many material products, including housing space. According to data from the Japan Cement Association, Japan's cement consumption and the number of new real estate units opened peaked around 1995 and then continued to decline. In 2017, the number of new real estate units opened in Japan fell below 1 million, while in 1990 it was close to 2 million.

Therefore, judging from Japan's experience, aging poses a great challenge to the economic operation of the country as a whole. In a situation where overall consumption is shrinking, the scale growth of industries such as manufacturing and construction is very limited, and there has even been negative growth. The symptoms of “low desire to consume” are unavoidable.

The “silver hair economy”Investment opportunities

China's desire to have children is close to Japan's, and the aging trend is on par with Japan's. Although the problem of balanced population structure is a great test plaguing the healthy development of a country, there are also quite a few opportunities for entrepreneurs under the aging trend.

In the capital market, after the Census data was revealed, A-share pension concept stocks continued to rise strongly, and the sector accumulated a cumulative increase of more than 8% from May 10 to 12. According to the Wind classification, there are more than 50 A-share pension concept companies, which can provide various products and services to the elderly population in all aspects.

In fact, the opportunities brought about by aging can be explored from the needs of the elderly. This is mainly reflected in three aspects: old-age services, the real pension industry, and pension finance.

Old-age services refer to providing necessary life services for the elderly to meet their basic needs in material and spiritual life. In the field of consumption and services, it mainly includes clothing, food, lodging, travel, and funerals; in the field of entertainment and leisure, including tourism, chess and cards, etc.

There are few A-share companies in the field of old-age services, including Nanjing Xinbai (600682.SH) in the retail industry, Song Cheng Performing Arts (300144.SZ) in the entertainment industry, China Central Bank (601888.SH) and Jinjiang Hotels (), and Vanke A (000002.SZ) in the health care sector, and Shandaji Wei (). 600754.SH 688579.SH

The physical pension industry is the sector with the broadest market under the aging trend. It mainly includes biopharmaceuticals, medical equipment, and products for the elderly. Biomedicine, on the other hand, plays an important role, because in China, most of the money one earns in a lifetime is probably spent on hospitals and pharmaceuticals. Therefore, for the aging trend, it is very beneficial to the biomedical industry.

According to statistics from Caihua News Agency, out of 54 A-share pension concept stocks, there are 29 biomedical companies, accounting for more than 50%. Among these biomedical companies, the main products include all kinds of specialty pharmaceuticals, health products, medical equipment and vaccines, etc., as well as businesses involving pharmaceutical retail and elderly products.

It is an inevitable trend for the elderly to increase their spending on physical pension industries such as health care, and these related companies will benefit. Taking elderly products as an example, sales of diapers for the elderly in Japan surpassed baby diapers for the first time in 2014. It can be seen that the elderly population is in great demand for geriatric products.

Judging from the performance of the capital market, in the three trading days after the Census data was revealed, the stock prices of most of the 29 related companies rose to varying degrees.

Pension finance is also a major investment area under the aging trend. When the level of social security does not meet the needs of middle-aged and elderly people, middle-aged and elderly people have a higher demand for insurance, which mainly consists of life insurance. According to Swiss Sigma data, at the end of the 20th century, when aging accelerated, Japan's life insurance depth exceeded 8.5, which is the highest in history. According to data from the Japan Life Insurance Association, in 2018, Japan's insurance density was 7.7%, exceeding the world average of 5.4%, and the premium income market share ranked third in the world.

Among the A-share pension concept stocks, there are 7 companies that design pension finance fields, including Ping An of China (601318.SH), China Life Insurance (601628.SH), and China Construction Bank (). The products of these companies cover fields such as pension insurance and health insurance. 601939.SH

In the future, the penetration rate of insurance products in China will benefit from the deepening aging process and gradually increase.

Author: Far Far Away