Does future depopulation make international stocks less attractive?

General
1

I read an article predicting that population growth is reversing in developed nations, and it’s got me wondering about its impact on investing.

Here are some of the key points from the article:

  • Developed countries are seeing a population decline.
  • Social programs will be more strained due to fewer workers supporting them.
  • There will be fewer productive workers and innovators in these regions.
  • Countries with growing populations aren’t producing many skilled workers, so their economic growth prospects aren’t great.
  • The US is an exception with relatively high birth rates (still below replacement levels) and immigration keeping its population growing.

So, could the US be in a better position while other international markets face stagnation or decline due to these trends?

2

You’re overlooking the role of technology. Even with stagnant or shrinking populations, technological advancements can still drive economic growth.

4

But if human populations decline or stagnate, who will be buying your positions? A growing population of robots?

5

Other humans, of course.

6

You’re only considering the production side. The consumption side of the economy is even more important for growth.

7

They are definitely related, though. Since the 80s, with trickle-down economics, we’ve seen a disconnect, but it doesn’t have to be that way.

8

This is probably already priced into the market.

9

There are some factors that might soften the impact of population decline. We’ll likely see more investment in individual workers, and workplaces will adapt to attract semi-retired workers, parents, and people with different needs or backgrounds.

But overall, I agree that it will likely reduce future earnings for developed nations’ stock markets.

10

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11

The US will likely rely on immigration to counter the decline in birth rates worldwide. I’m personally not betting on international stocks. If you’re confident, though, you can go all-in on a VXUS portfolio.

12

Just open the borders, and skilled workers from places like China and India will come to the US and Canada.

13

I don’t think depopulation is a reason to avoid international stocks completely, but it might require a more selective asset allocation strategy.

For example, you might want to avoid sectors tied to domestic demand (like FTSE 250 companies in the UK) and focus more on global companies (like FTSE 100 stocks). You might also want to reconsider government bonds if a shrinking population affects the tax base.

That said, a passive investment strategy will likely account for these shifts over time. And countries like the UK may be able to slow population decline through immigration.

South Asia also has a lot of growth potential, so I wouldn’t want to cut out exposure there.

14

Just an FYI, gilt isn’t an acronym, so it’s not written in caps. The name comes from when they used to issue bonds with gilded edges.

15

We’ll probably see more immigration as the climate crisis worsens, which could help offset some population decline.

16

This is about international stocks, so immigration doesn’t really apply here.

17

The title mentions population decline, so immigration is definitely relevant.

18

It’s relevant for a single country, but in the global context, immigration is a zero-sum game. It just moves people around, but it doesn’t change the overall population decline.

19

Most international index funds are heavily weighted toward Western economies, which is where people would likely move due to climate change.

20

AI is going to replace humans. NVDA stock to the moon!

21

How would depopulation affect real estate in this scenario?