Vivian Lin Thurston from William Blair Emerging Markets Growth shares what investment opportunities she is focusing on for the consumption theme in emerging markets.

Delhi

Vivian Lin Thurston from William Blair Emerging Markets Growth discusses the increasing importance of middle-class consumption as a driver for investment in emerging markets. She notes that India is experiencing significant growth in consumer discretionary spending as its per capita income rises, leading to strong earnings for companies in travel, premium goods, and property sectors. In Saudi Arabia, structural reforms and increased female labor participation are unlocking new spending power, further boosting domestic consumption.

China, while facing broader challenges in consumer spending, shows robust growth in specific segments such as skincare, cosmetics, gold jewelry, and specialty foods and beverages. Thurston emphasizes that companies with strong exposure to domestic consumption and industrialization trends in these regions are well-positioned to benefit, and that these trends can help insulate them from external risks such as tariffs.

Rising middle-class consumption trends to watch in India, Saudi, China

Another theme like which is a little bit more prosaic is middle class consumption. And there we should be looking at EMS like in Latin America. Last time as as well as Saudi. Yeah you're right. Actually rising middle class consumption has been a very important investment case for emerging markets for decades. And I think this driver become even stronger for some of the countries. India is one great example. As the country crosses thirty five hundred dollars per capita income point it kind of get into the S curve of the consumption meaning that you start to release much higher spending on the consumer discretion in front. And that's why we see a lot of companies whether you travel whether you premium consumption property purchase in India start to show tremendous earnings growth. So that's one example. And the other one you mentioned Saudi Arabia. They actually point to another very important development in emerging markets overall which is structural reforms. And then as the governance both on the corporate level and on the government level start to get better. In this case Saudi Arabia launched this Saudi version 2030 to modernize their society and then continue to upgrade their economy to be less dependent on oil. This definitely contribute to tremendous consumer growth and especially as the female labor participation rise from mid single digit to 40 percent that unlock tremendous spending power. Yeah. So those are just examples. And Latin America also on the same track. So from that end angle we tend to like emerging companies with a strong exposure to domestic consumption a domestic industrialization trend. And that can insulate themselves a little bit away from the tariff risks. Yeah I hear you Vivian. So out here in Asia you talked about last time a Saudi out here in Asia. You mentioned India. The other market with huge consumer potential is of course China. All right. How are you thinking about that market. Because consumption seems to be the thing that the government so far has not really been able to get going. Yeah. On the broader base you are right. China consumer and consumption remain quite weak. And that's why they continue to grapple with the deflationary measures impact. However if you look at some specific segment within the consumption such as the new consumption of self indulging consumption across skin care cosmetics gold jewelry some collectible toys and some freshman and beverages you see quite strong consumption growth. So China is relatively developed in terms of the middle class consumption. Therefore they are more on the higher end of that curve. It become more kind of competitive and also consumers are more sophisticated. So they only want to pay for something that they feel there's a value to them. So that's we call self indulging a new consumption in China as you start to show tremendous growth. And that also lead to a lot of very good companies. And they're also very strong IPO markets in Hong Kong.

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