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Investing in the Rise of the New Spending Class

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Investing in the Rise of the New Spending Class

Investing in the Rise of the New Spending Class

It’s no secret that the world has been a little down on China.

The world’s most populous country has been the primary engine of economic growth for decades, but recently investor optimism around China has diminished significantly. With a sliding manufacturing sector and lower GDP growth, most mainstream pundits have shifted focus to whether the country will have a “soft” or a “hard” landing.

Ever the contrarian, investor and author Gianni Kovacevic is not one to buy into this Kool Aid.

In his new book “My Electrician Drives a Porsche?”, Kovacevic examines the fundamentals around China and other emerging markets to create perspective on the newest and fastest-growing generation of consumers. Using an allegorical conversation between a doctor and his Porsche-driving electrician, the impact and ripple effects of this new “spending class” are described, affecting everything from the economy to the environment.

We thought the book had some great statistics on emerging markets, and that the easy-to-follow conversation was an effective way at introducing the contrarian way of thinking. Further, the book also outlines an interesting track on how to invest in green energy specifically.

Key Themes

Today’s infographic pulls some of the themes from this book to show who makes up the new spending class, and why their inevitable rise will translate to a blossoming green energy sector. There is much more meat to the book and to avoid spoilers, we’ve left out Kovacevic’s ultimate investment conclusion.

However, here are some of the points that we thought were most compelling:

Millennials

Millennials get a lot of media coverage in the United States. There’s 87 million of them and they have already had a profound impact on the economy. That said, it is incredible to think that the same generation in China is nearly 5x as big with 415 million people. This cohort of millennials (16-35 years old) in China is larger than the entire working populations of the U.S., Canada, and Western Europe combined.

Millennials in China and other emerging markets are nothing like previous generations. For example, in China, millennials have already earned 107 million college degrees, while all other previous generations have combined for a grand total of only 14 million. Newly educated and aware of the modern world through technology, China’s millennials do not want to work in factories or fields.

Spending Class Potential

China’s spectacular growth isn’t coming to an end anytime soon. The country is in 74th place worldwide in GDP per capita with $8,280. This is compared to neighboring countries such as Japan and South Korea, which have amounts closer to $30,000 per capita.

Only 22% of the Chinese population has drivers licenses, yet the country is already the largest auto market in the world with close to 25 million cars sold per year. Imagine how many refrigerators, air conditioners, and other basic comfort products the spending class will be buying over the coming years as their disposable income rises.

Energy

The common denominator of these goods is that they all take significant amounts of raw materials and energy to manufacture. Most of these goods, such as refrigerators or air conditions, require great amounts of energy to constantly power as well.

Today, the average person in China uses less than 30% of the energy used each year by an American. As 400 million people buy these essential goods of human progress and comfort, the energy draw will rise rapidly. Where will this energy come from?

Certainly all power sources will be a part of this energy mix going forward, but China is leaning green the most. Air pollution is so bad in China that it is commonly referred to as the “Airpocalypse”. It’s estimated that pollution kills 4,000 people per day in China, and green energy will help combat this problem.

That’s why China is building 1,000 GW of green energy capacity between 2014 and 2030, which is the equivalent of 90% of the entire current U.S. energy grid.

Tesla Tour

To amplify the message of the book, Gianni Kovacevic is embarking on “The Realistic Environmentalist Tesla Tour” to 32 official cities in North America. This one-of-a-kind, zero emissions book tour will be facilitated by driving a Tesla Model S from Toronto to California. The objective is to enlighten millions of people by illustrating what makes green energy and human progress factually possible while debunking common myths from the validity of electric cars to the future of energy.

Here’s more on the Tesla Tour in his own words:

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Visualizing the World’s Top Plastic Emitting Rivers

Every year, 8 million metric tons of plastic enters the world’s oceans – much of it through our river systems. See which rivers are polluting the most.

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Visualizing the World’s Top Plastic Emitting Rivers

Every year, approximately eight million metric tons of plastic enters the world’s oceans – the equivalent of one garbage truck of plastic every single minute.

Every plastic fork and bottle cap bobbing along the surface of the ocean has made its way to the ocean from dry land at some point. As it turns out, the hydrological cycle that keeps water circulating around the planet is also an effective means for trash to hitch a ride from our riverside cities to the open ocean.

As today’s unique, vintage-themed map – via John Nelson at ESRI – visualizes the shocking amount of plastic emitted by major rivers in the world.

Plastic Superhighways

It would be hard to overstate plastic’s influence on modern life.

Unfortunately, when plastic is finished doing it’s job, only 10% of it ends up being recycled. Instead, much of the 300 million tonnes of plastic produced each year ends up in the ocean, congregating in places like the Pacific Garbage Patch.

Plastic discharge is especially pronounced in large population centers along large rivers – particularly in rapidly urbanizing regions in China, Indonesia, and Nigeria.

River plastic emissions to the world’s oceans

Waste management practices are limited to non-existent in many of Asia’s fast-growing urban areas, so it comes as little surprise that 14 to the top 20 plastic emitting rivers are located on that continent.

The mighty Yangtze – China’s largest river – supports a population of over 400 million people and is the most prolific emitter of plastic waste on the planet. Over 1.5 million metric tons of plastic is unleashed into the Yellow Sea from the river each year.

Stemming the Tide

Plastic emissions data makes one point clear – China is the key to decreasing the volume of trash entering our ocean ecosystems.

The good news is that the Chinese government has recognized the problem, mandating garbage sorting in nearly 50 cities and setting a target for at 35% recycling rate by 2020. A positive first step in the battle to stem the tide of plastic entering ocean systems.

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Upward Momentum: Charting a Year of Skyscraper Construction

Nearly 150 skyscrapers were completed around the world last year. Find out which cities and regions are growing skyward the fastest.

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Ever since the first towering spires broke through the clouds in New York and Chicago, skyscrapers have remained a potent symbol of economic might.

The tallest buildings require vast amounts of materials, expertise, and capital to make them a reality, but the cities that add these landmarks to their skylines gain prestige and send a powerful message to competing economic centers.

Skyscraper Construction in 2018

Where are the most skyscrapers popping up? Let’s take a look at regional hot-spots around the world.

Charting a Year of Skyscraper Construction
Note: For the purposes of this article, “skyscraper” will refer to buildings 656 feet (200 meters) or more in height.

China is Flying High

For well over two decades, China has led the world in skyscraper construction, and 2018 was no exception.

The country’s fixation on urban growth and continued economic success is producing tall buildings at a staggering rate. Last year, a mind-boggling 89 skyscrapers were completed in 28 different cities around China.

To put this building boom into perspective, China completed more skyscrapers in one year than New York City’s entire stock of 656ft and taller buildings.

Skyscrapers in China

In 2018, no city reached for the stars quite like Shenzhen. The city, which is a hub of China’s high-flying tech sector, now has the second-most skyscrapers in the world, surpassed only by Dubai.

Shenzhen isn’t just building a lot of skyscrapers, it’s building extremely tall ones too.

In 2017, for example, the ribbon was cut on the massive Ping An Finance Center, which is currently the 4th tallest building in the world. Last year alone, four new towers cracked the 1,000ft (300m) barrier.

Asia, Rising

While China’s scale is hard to beat, other cities in the region are also undergoing dramatic changes, particularly in Southeast Asia. Malaysia and Indonesia completed a combined 13 new skyscrapers, and the Vincom Landmark 81 was added to Ho Chi Minh City’s growing roster of unique skyscrapers.

While there are two skyscrapers under construction in Japan – one in Tokyo and one in Yokohama – none of them were completed last year.

A New Era of American Skyscrapers

After a two-decade lull in skyscraper construction, the United States is embracing taller buildings again. Last year alone, the U.S. added 14 new skyscrapers into the mix, particularly in New York City, where construction cranes dot the horizon. In the past decade, NYC has added 25 new skyscrapers to its iconic skyline.

This trend is showing no signs of slowing down. Between now and 2022, 44 skyscraper projects are expected to be completed in the United States, with the vast majority being built in the Big Apple.

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