Generation Z will change investing forever, warns BofA


By CAPosts 19 November, 2020 - 02:49pm 156 views

The consumption of meat is not in fashion, the embarrassment of traveling by plane is. Gen Z is transforming the world and investors need to be prepared. As “zillenials” come of age, this new cohort will eclipse millennials, give emerging markets a boost, and help certain sectors outperform the market as other, more outdated companies fall by. the way, Bank of America wrote in a recent report. "The Gen Z revolution is beginning, as the first generation born into a digital world now enters the workforce and forces other generations to adapt to them, not the other way around," said strategists led by Haim Israel.

© iStockphoto Nine out of 10 Gen Z individuals live in emerging markets

Gen Z, the group born between 1996 and 2016, is on track to surpass millennials in income by 2031, according to the BofA report. And nine out of 10 live in emerging markets. India accounts for about 20% of the total. Countries like Mexico, the Philippines and Thailand will also benefit from the change. The sectors that will benefit include e-commerce, payments, luxury, media and sustainable investments, according to BofA, while areas such as alcohol, meat, cars and travel may be affected. BofA surveyed more than 14,000 Gen Z members in August, and here are some of the findings: - Most have a meat restriction of some kind, and many don't drink. - They embrace new technology to manage finances, from phones to cryptocurrencies, which means that banks and asset managers will have to re-evaluate their services. - 40% of 16-18 year olds would prefer to interact virtually with friends compared to 35% of millennials and 30% of Gen X. - Around 18% of 18-24 year olds watch traditional sports regularly every month, compared to 21% who watch eSports regularly every month

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Investment consequences could include, according to BofA: -Sustainable consumer-driven activism could result in risks to “harmful” sectors such as fast fashion. -A greater focus on Asia-Pacific, which accounts for 37% of Gen Z revenue; this will increase to 41% by 2040. -Voice technology could allow better access to e-commerce for people with literacy limitations as voice assistants are introduced in more languages. -The airline and travel industry could be hit by sustainability concerns as "flying embarrassment" prevails. -Alcohol and tobacco companies will have to focus more and more on products considered healthier, such as drinks with lower sugar and alcohol content, or hot rather than burnt tobacco. And in case this isn't advanced enough for you, BofA notes that next to come are Gen C - the covid generation. "It is the generation that will only have known problem solving through fiscal stimulus and free government money, which could pave the way to universal basic income and access to health care," the strategists said. "Generation C will not be able to live without technology in all aspects of their lives."