Migration patterns caused by climate change is incremental but impactful: people moving from the coast to cities; rural communities becoming urban sprawls; people moving from the country to the city or even across borders because of famine.
Peers says: “Many people (including investors) think they have time to adapt, but ultimately they don’t.
“For instance, people still buy property in warm coastal regions, even knowing that climate change gradually leads to higher sea levels and potentially disastrous weather events, such as hurricanes or tornadoes.”
On top of this is global population growth. According to Worldometers, humans now number 7.3bn to 8.04bn in 2024, compared with 6.4bn in 2004 and 5.6bn in 1994.
Kumar says the intersectionality between population growth and resources must be factored into long-term investment thinking: “If there are more people around for a longer time, the demand for natural resources will increase (even if births plateau).
"Whether it’s fuel for all those cruise ships, or building materials for accommodation, or basic food and water supplies, more infrastructure is necessary to maintain living standards.”
Therefore, any investor looking to build a long-term portfolio must understand these social factors.
But as NinetyOne's Siow comments, population growth has helped some emerging market economies - notably India, which overtook China as the country with the largest population and is on a pacy growth trajectory.
He explains: "Relatively favourable demographics are one of the key reasons why we are bullish about the prospects for EM countries and the EM corporates that operate within them, and we believe the growth and demographic dynamics that favour frontier markets will see them continue."
The chart above shows how emerging and frontier markets particularly benefit from rising working-age populations.
That said, South Korea's GDP per capita is 15 per cent higher than Spain’s, more global companies than Hong Kong and a higher life expectancy than New Zealand, Kumar points out.
And, while China is often portrayed as having "passed its demographic peak", with a falling working age population, Siow says investors should not write it off, largely because labour productivity has "room to increase", relative to other large economies,
What is happening with women?
Half of the world’s population are women. In some cases, in more developed countries, they are on the path to financial resilience, despite persistent gender pay, protection and pension gaps.
In developed countries, governments have recognised the economic power of working women. In the UK, chancellor Jeremy Hunt unveiled measures to help get more women, particularly young mothers and those aged 50 and above, back into paid employment.
Japan, too, has been encouraging women into the workforce. The number of working women in Japan rose to 30.4mn in 2022 - a staggering increase on the 1.2mn in 2017, according to a 2023 government survey.
