It’s no secret that Asia is now the powerhouse of the world.
Strong economic growth in the region has lifted the fortunes of millions, leading to a rapid surge in middle-class numbers.
Even recent events such as the COVID-19 pandemic, high interest rates, and geopolitical uncertainty have failed to derail this growth.
According to Oxford Economics, the number of households entering the middle class in Asia (defined as those with a combined annual income of US$20,000 or above) increased by more than 332 million in the past decade.
That’s just the beginning, though.
This number is projected to surge by another 352 million by 2034.
By then, the number of middle-class households in the Asia-Pacific region will exceed a billion, more than eight times the number in the US.
China and India lead the way
While consumer optimism in China saw a decline in 2022, it recovered slightly by the fourth quarter of 2024.
Analysts from UBS believe that China’s consumer sector could be near a “tipping point” following last September’s stimulus blitz from the Chinese government.
Household excess savings continued to grow last year, albeit at a slower pace, and consumers are now pivoting towards quality and sustainability.
The good news is that retail sales still grew by 3.5% year on year to RMB 48.8 trillion last year, and as consumers absorb the effects of the stimulus, spending could increase again in 2025 and beyond.
Meanwhile, India is also seeing an explosion in spending, with the consumer market set to grow by 46% by 2030.
This surge will be driven by rising incomes, urbanisation, and an expanding middle class, and is projected to reach US$4.3 trillion by the end of this decade, up from just US$2.4 trillion last year.
Capturing a slice of this burgeoning growth
As Asians, we live in exciting times.
With the region set to become an economic powerhouse, you must capture a slice of this growth by investing in stocks that can ride this wave.
Many stocks can allow you to participate in this growth.
Haw Par Corporation (SGX: H02) distributes its Tiger Balm-branded healthcare products such as balms and pain patches throughout Asia and the world.
The group recently reported a steady set of results for 2024 with revenue and net profit rising by 5.5% and 5.4% year on year, respectively, to S$244.8 million and S$228.3 million.
More importantly, Haw Par also declared a special dividend of S$1 along with a final ordinary dividend of S$0.20, bringing the year’s dividend to S$1.40.
Then there is Fraser & Neave (SGX: F99), a food and beverage powerhouse that owns brands such as 100Plus, Nutrisoy, Seasons, and Magnolia.
The group is present in 12 countries spanning Asia Pacific and the Americas and recently reported a solid business update where net profit for the quarter climbed 18.8% year on year.
Let’s not forget pan-Asian retailer DFI Retail Group (SGX: D01), which owns supermarkets, convenience stores, and health and beauty chains across Singapore, Hong Kong, and Malaysia.
Consumers who love to guzzle on soy beans will be attracted to products sold by Vitasoy International (HKSE: 0345), which has been supplying its soy-based drinks since 1940.
The growth potential of Asia’s consumers has not escaped the attention of my colleague, David Kuo.
Get Smart: Invest for growth and dividends
David’s strategy is simple yet effective.
He invests in businesses with solid long-term growth potential, buoyed by sustainable trends such as the growth of Asia’s middle-class population.
Of course, he will spend time filtering out the best of this lot that has proven its worth through consistent increases in revenue, profits, and free cash flow.
There is an important condition that must be fulfilled – the business MUST pay a dividend.
David’s focus is on receiving regular income from dividend-paying stocks while riding on Asia’s growth.
If you are looking for an attractive mix of growth and dividends, you can consider taking David’s lead in looking at promising Asian stocks.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
