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Animation: Comparing China vs. India Population Pyramids

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Enacted in 1979 by China’s Communist Party, the controversial “One Child Policy” was primarily meant to slow the country’s rapid population growth, while capping the growing drain on China’s limited resources.

Even though the government’s primary objectives were arguably achieved through these extreme measures, it has been at an extraordinary human cost. The draconian enforcement of these policies, combined with the unintended consequences on families and the cultural preference for male children, will have an everlasting impact on the country’s future.

Wonky Demographics

Fast forward to today, and the policy is still in place, but to a lesser effect. Since early 2016, families have been allowed to have two children – but even with this change in place, China still has a self-inflicted demographic disaster on its hands.

In the below population pyramids created by Aron Strandberg, the very different trajectories of China and India are compared directly. China is not only skewing older and more male – it is also losing its strong base of younger workers that could potentially support the rest of the population.

Animation: Comparing China vs. India Population Pyramids

China’s “population pyramid” is not really a pyramid at all – in the coming decades, it’ll look more like a single pillar stuck propping up a burgeoning elderly demographic of people born before 1979.

And over time, the unintended and ongoing effects of population control will be extremely impactful on China’s future. As one example of the emerging challenges, a recent estimate published in Scientific American pegged China’s shortage of women at 62 million, creating a situation where there’ll be millions of men who are unable to marry.

This gender imbalance exacerbates an already existing shortfall at the younger end of China’s population spectrum – and the end result will be a rapidly falling ratio of workers to retirees in the Chinese economy:

China workers per retiree

Today, the ratio is roughly seven workers per retiree – and by 2050, when China’s population is 100 million people fewer than it is today, there will be just two workers per retiree.

A New Population Paradigm

As China struggles with a declining population and a lack of young people, India is expected to takes its place as the most populous country in the world by roughly 2027.

Most populous countries in the world

This new paradigm will be an incredibly interesting one to watch.

By the year 2100, China won’t be home to a single one of the world’s 20 most populous cities.

Instead, these massive metropolises will almost exclusively be located in places like India and Africa – and some of them, like Mumbai, will hold 60 million or more inhabitants.

China’s New Hope

While this shift in global demographics is going to be extremely difficult to deal with for China, there is optimism that increasing levels of automation and the emergence of artificial intelligence will help make up for any shortfalls.

The AI market alone is expected to drive $7 trillion in GDP growth by 2030, and China’s investments in robotics and automation are sure to keep the country a center of manufacturing in the future – even if those factories are being staffed with robots instead of workers.

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The European Stock Market: Attractive Valuations Offer Opportunities

On average, the European stock market has valuations that are nearly 50% lower than U.S. valuations. But how can you access the market?

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Bar chart showing that European stock market indices tend to have lower or comparable valuations to other regions.

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The following content is sponsored by STOXX

European Stock Market: Attractive Valuations Offer Opportunities

Europe is known for some established brands, from L’Oréal to Louis Vuitton. However, the European stock market offers additional opportunities that may be lesser known.

The above infographic, sponsored by STOXX, outlines why investors may want to consider European stocks.

Attractive Valuations

Compared to most North American and Asian markets, European stocks offer lower or comparable valuations.

IndexPrice-to-Earnings RatioPrice-to-Book Ratio
EURO STOXX 5014.92.2
STOXX Europe 60014.42
U.S.25.94.7
Canada16.11.8
Japan15.41.6
Asia Pacific ex. China17.11.8

Data as of February 29, 2024. See graphic for full index names. Ratios based on trailing 12 month financials. The price to earnings ratio excludes companies with negative earnings.

On average, European valuations are nearly 50% lower than U.S. valuations, potentially offering an affordable entry point for investors.

Research also shows that lower price ratios have historically led to higher long-term returns.

Market Movements Not Closely Connected

Over the last decade, the European stock market had low-to-moderate correlation with North American and Asian equities.

The below chart shows correlations from February 2014 to February 2024. A value closer to zero indicates low correlation, while a value of one would indicate that two regions are moving in perfect unison.

EURO
STOXX 50
STOXX
EUROPE 600
U.S.CanadaJapanAsia Pacific
ex. China
EURO STOXX 501.000.970.550.670.240.43
STOXX EUROPE 6001.000.560.710.280.48
U.S.1.000.730.120.25
Canada1.000.220.40
Japan1.000.88
Asia Pacific ex. China1.00

Data is based on daily USD returns.

European equities had relatively independent market movements from North American and Asian markets. One contributing factor could be the differing sector weights in each market. For instance, technology makes up a quarter of the U.S. market, but health care and industrials dominate the broader European market.

Ultimately, European equities can enhance portfolio diversification and have the potential to mitigate risk for investors

Tracking the Market

For investors interested in European equities, STOXX offers a variety of flagship indices:

IndexDescriptionMarket Cap 
STOXX Europe 600Pan-regional, broad market€10.5T
STOXX Developed EuropePan-regional, broad-market€9.9T
STOXX Europe 600 ESG-XPan-regional, broad market, sustainability focus€9.7T
STOXX Europe 50Pan-regional, blue-chip€5.1T
EURO STOXX 50Eurozone, blue-chip€3.5T

Data is as of February 29, 2024. Market cap is free float, which represents the shares that are readily available for public trading on stock exchanges.

The EURO STOXX 50 tracks the Eurozone’s biggest and most traded companies. It also underlies one of the world’s largest ranges of ETFs and mutual funds. As of November 2023, there were €27.3 billion in ETFs and €23.5B in mutual fund assets under management tracking the index.

“For the past 25 years, the EURO STOXX 50 has served as an accurate, reliable and tradable representation of the Eurozone equity market.”

— Axel Lomholt, General Manager at STOXX

Partnering with STOXX to Track the European Stock Market

Are you interested in European equities? STOXX can be a valuable partner:

  • Comprehensive, liquid and investable ecosystem
  • European heritage, global reach
  • Highly sophisticated customization capabilities
  • Open architecture approach to using data
  • Close partnerships with clients
  • Part of ISS STOXX and Deutsche Börse Group

With a full suite of indices, STOXX can help you benchmark against the European stock market.

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Learn how STOXX’s European indices offer liquid and effective market access.

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