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October 2018

Source: Ashburton Investments

Key messages

2

• 2030

• A billion boomers

• Millennials and the “Crazy Rich Asians”

• Consumption trends

• Investment implications

3

Economic history:

China and India

turning back the

clock0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 1000 1500 1600 1700 1820 1850 1870 1900 1913 1940 1950 1960 1970 1980 1990 2000 2008

Share of global GDP

United States Europe India China Rest of the World Africa Brazil Russia

Economic history: China and India turning back the clock

Source: Angus Maddison, Ashburton Investments, United Nations

More people live inside this circle than outside it

Source: Ashburton Investments, BCMM Brilliant Maps

5

Global distribution to 2030

Source: Homi Kharas, Brookings Institution

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Global distribution of the middle class to 2030

China India Other Asia Japan USA EU Other

Middle class market in 2015

Source: Ashburton Investments, Mauro F. Guillen

Middle class market in 2030

Source: Ashburton Investments, Mauro F. Guillen

Source: Ashburton Investments, CLSA

Rise of the millennials (Born 1983 – 1998)

8

0

50

100

150

200

250

300

350

China India Indonesia Japan Korea

Millennials in each country

Mill

ion

s o

f p

eo

ple

Source: Ashburton Investments, CLSA

Rise of the millennials (Born 1983 – 1998)

9

0

1

2

3

4

5

6

7

8

9

10

China India Indonesia Japan Korea

(US

$ t

rilli

on

s)

Expected addition to total consumption, 2017 - 30

Mill

ion

s o

f p

eo

ple

Rich young things

Source data: CapGemini/Merrill Lynch Global Wealth Management, CLSA

0

20

40

60

80

100

120

World 2008 World 2010 Asia-Pacificex Japan

Japan Europe LatinAmerica

Middle East NorthAmerica

Ye

ars

Millionnaires by age

<31 31-45 46-55 56-65 66-75 75+

Source: Ashburton Investments, Bloomberg, IMF

The astonishing rise of China

11

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000 GDP, current prices (PPP, int'l $ billion)

United States China

Source: Ashburton Investments, Bloomberg, IMF

The astonishing rise of China

12

0

5

10

15

20

25

30

U.S China India Germany Brazil

Growth in per capita GDP (1990-2017)

Source: Ashburton Investments, Young China Group LLC

‘Old’ versus ‘new’ China

13

Source: Ashburton Investments, Young China Group LLC14

‘Generation Gulf versus Generation Gap’

USA then…

Source: Ashburton Investments, Young China Group LLC15

‘Generation Gulf versus Generation Gap’

USA now…

Source: Ashburton Investments, Young China Group LLC16

‘Generation Gulf versus Generation Gap’

China then…

Source: Ashburton Investments, Young China Group LLC17

China now…

‘Generation Gulf versus Generation Gap’

Source: Ashburton Investments, Young China Group LLC18

Baby Boomers Millennials

Insulated Open minded

Impoverished Rags to riches

‘Sick man of Asia’ Proud

Local successes Globally cosmopolitan

Nouveau riche 2nd/3rd generation wealth

Glitz orientated Glitz/Value orientated

Eat bitter Live in the moment

Proud + local Proud + global

‘Generation Gulf versus Generation Gap’

A story of commercial success and investor excitement

China’s digital economy

19

790

74

0

200

400

600

800

1000

Mobile payments, 2016, $ billion

China United States

0%

20%

40%

60%

80%

100%

Total Number Total valuation

% of global unicorns, June 2016

China United States Rest of the World

0%

20%

40%

60%

80%

100%

2005 2016

% of total retail e-commercetransaction value

China United States Rest of the World

Source: Ashburton Investments, McKinsey & Co, 2018

Source: Ashburton Investments, China Daily/Asia News Network, Twitter,

A new payment ecosystem: No cash = no problem!

11

China’s rising consumer class

21 Source: Ashburton Investments, Euromonitor

Per-capita consumption

per category

(US$) 2017 2030

Food & beverage 749.8 1950

Alcohol & tobacco 274.2 716.9

Clothing & footwear 246.6 744.4

Housing 722.3 2160.4

Health related 158.9 477.9

Transport 377.9 1122.3

Leisure & recreation 186.9 548.5

Education 168 480.9

Hotels & catering 187.3 540.2

Personal care 65.2 162.3

Others 228.9 649.2

0%

50%

100%

150%

200%

250%

Accumulated % growth per category, 2017-30

Source: Ashburton Investments,IMF, Factset, Bloomberg, 2018, *PPP (Purchasing Power Parity )

Maybe the most important chart for investors

22

0% 5% 10% 15% 20% 25% 30% 35%

MSCI All Country World Index

Bloomberg BarclaysGlobal Aggregate Index

Market capitalisation (total)

Military spending (current),adjusted PPP*

GDP (current prices),adjusted for PPP*

Foreign exchange reserves

Money supply

China's share in the world

23

India- the world’s fastest

growing major economy

Source: Ashburton Investments, CLSA 2018 24 Source: Ashburton Investments, CLSA 2018 24

India demographics

Source: Ashburton Investments, CLSA 2018 25 Source: Ashburton Investments, CLSA 2018

Indian e-commerce growth

25

45

450

0

50

100

150

200

250

300

350

400

450

500

2017 2028

US$ (bn) India e-commerce market

10x

Source: Ashburton Investments

India's "Iron triangle" - Payments = Opportunity

26

1. Payments

Opportunity

Source: Ashburton Investments

What is enabling India’s explosive

growth in e-commerce?

27

Source: Ashburton Investments28

Like China - A new

payment ecosystem:

No cash = no

problem!

Source: Ashburton Investments29

Source: Ashburton Investments

Access to financial

services facilitating

change

30

Government pushing digital payment reforms

31

Source: Ashburton Investments

Iron triangle “Iron triangle” = Data = Access

32

1. Payments

2. Data

Access

0

1

2

3

4

5

6

7

8

9

0

20

40

60

80

100

120

140

160

180

UK US China SA India

ZAR

co

st /

GB

dat

a p

lan

Data affordability GB/month usage

Source: Ashburton Investments

Smartphone penetration moving up

33

Affordability of smartphones now similar to China (1.3% of GDP/capita)

0

10

20

30

40

50

60

70

80

90

100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

US v India smartphone penetration

India (2011-2017) USA

Source: Ashburton Investments

India’s “Iron triangle” = Logistics = Delivery

34

2. Data

3. Logistics1. Payments

Delivery

Access

Opportunity

35

Logistics – on the road, and rail to success

Source: Bloomberg, Ashburton Investments, CCI

START

Delivering goods from

Punjab to Kerala:

PRE GST= 21 DAYS

POST GST= 9 DAYS

FINISHING

36

The India investment opportunity

Source: Ashburton Investments

Technology + Government

Aadhaar / UID

Digital platforms

Financial mobility

India Stack

Smartphones

Consumption Investment

Economic growth

Bank accounts

Demographics

Rural

Urban

i

Source: Ashburton Investments 37

Ashburton Chindia Equity Fund

MSCI India

MSCI China

MSCI RussiaMSCI South Africa

MSCI Korea

MSCI Brazil

MSCI EM

-20

-10

0

10

20

30

40

50

60

70

80

12 17 22 27 32 37

Retu

rns (

%)

Annualised daily volatility (%)

5 year Risk adjusted returns (USD)

Chindia Equity as part of a balanced portfolio

38

92

102

112

122

132

142

152

162

9/3

/13

11/3

/13

1/3

/14

3/3

/14

5/3

/14

7/3

/14

9/3

/14

11

/3/1

4

1/3

/15

3/3

/15

5/3

/15

7/3

/15

9/3

/15

11

/3/1

5

1/3

/16

3/3

/16

5/3

/16

7/3

/16

9/3

/16

11

/3/1

6

1/3

/17

3/3

/17

5/3

/17

7/3

/17

9/3

/17

11

/3/1

7

1/3

/18

3/3

/18

5/3

/18

7/3

/18

9/3

/18

Utilising the Chindia Equity Fund in a Global Balanced portfolio

Balanced portfolio (65% Global equity/ 35% Global bonds) Balanced portfolio (65% Global equity / 35% Global bonds, using Chindia as an EM Proxy)

Source: Ashburton Investments

Source: Ashburton Investments , Bloomberg

Chindia Equity as part of a balanced portfolio

39

Balanced PorfolioBalanced Portfolio using

Chindia as an EM proxy

Total Return Performance 32.12% 43.86%

Compounded Annual Return 5.74% 7.56%

Annualised total Volatility 8.53% 7.55%

Source: Ashburton Investments

Source: Ashburton Investments , Bloomberg

40

Summing up

4

0

• 2030 – a very different place to today

• China and India’s millennial generation

• Investment opportunities are wide-ranging

• Do you have appropriate exposure?

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