A professional investor tells us where he'd put his money. This week: Zehrid Osmani of the Martin Currie Global Portfolio Trust selects three favourites
The rapid expansion of the emerging-market middle class is a key long-term growth theme. In China alone, the middle class is expected to more than double over the next ten years, while the segment defined as affluent is forecast to grow even faster. As a result, one area of interest over the coming decade and beyond is luxury goods.
We expect growth in the emerging-market luxury sector, especially in China, to continue to outpace global growth and accelerate as price harmonisation, more sophisticated marketing and e-distribution democratise access. With global markets worried about a short-term slowdown, this may prove a good opportunity for long-term investors to consider this structural growth story. The following companies offer excellent exposure to the theme.
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Europe's classic luxury brands
Kering (Paris: KER)
Importantly, the Kering group has only just re-focused purely on luxury after dabbling with other areas such as sportswear; this is transformational for the group's return on invested capital (ROIC, a key gauge of profitability) and future prospects for growth and value creation. We believe a culture of growth and investment will protect this profile and boost shareholder returns.
Luxury va-va voom
Ferrari (Milan: RACE)
Moncler will march on
Moncler (Milan: MONC)
However, investors currently seem focused on short-term concerns around trade and a slowdown in China, and appear to be overlooking the attractive long-term growth opportunity and the management's exemplary execution. Taking the long-term view, we think the structural growth potential of the company is compelling, and its ability to continue to innovate remains strong.
