Millennials are the most powerful group of consumers. A lot of factors like social media, quality and uniqueness influence their purchasing behavior and buying decisions.

However, the report by US-based private equity giant KKR indicates that Asia has more than six times as many millennials than in the US and Europe combined, the Asian millennial will reshape the global consumer market. The report also highlighted the secular trend of consumers moving away from “things’ and towards “experiences’.

In the report Henry McVey, head of global macro and asset allocation, KKR, outlined his perspective on the current investing environment, details several investment considerations portfolio managers should have on their horizon, and shares his outlook for key action items and asset allocation targets for 2019 and beyond.

“As we begin 2019, we definitely tilt more positive in our global asset allocation and macro positioning, despite our call for a weaker economic environment,” McVey says. “However, it is not business as usual in the global capital markets these days. In our humble opinion, the game has changed,” he noted.

Investing in Experiences Over Things

The report observes that the “Experiences Over Things’ theme is not a new one and appears to have accelerated in recent months.

“Think posting a delicious meal on Instagram versus adding another sweater to the wardrobe. As we travel around the globe, particularly in Asia, we see that technology has made the movement towards “Experiences Over Things’ a secular trend with far ranging implications in major sectors such as healthcare/wellness, leisure, financial services, and entertainment. In the US too, consumers are earmarking an ever-growing amount of their paychecks for what we are increasingly coming to view as “fixed charges’ such as healthcare, rental expenses, and iPhone maintenance,” the report added.

China sees Sophisticated Consumers

According to the report, personal financial services, healthcare services, wellness/beauty, healthier foods, and food safety should also be major long-term beneficiaries of the environment. It further anticipates that the continued demand for China to tackle air, water and soil pollution, will likely create opportunities for companies that address these issues.

“Importantly, though, the Chinese consumer is becoming increasingly sophisticated, which is leading to a more demanding customer who uses technology more often to drive value, selects aspirational brands over standardized ones, and comparison shops more often than in the past,” said the report.

Nowhere is this shift toward e-commerce more prevalent these days than in China, with its outsized millennial population.

“By way of background, of the total 828 million millennials in Asia, my colleague Frances Lim estimates that fully 40%, or 330 million, are today in China. To put the 330 million in perspective, we would note that there are “just’ 66 million millennials in the U.S. Importantly, though, as we saw with Apple’s recent pre-announcement in early January 2019, this segment of consumers – even given its mighty heft – is also not immune to some of the trade and geopolitical anxieties that we have been highlighting to investors for quite some time,” the report said.