1、Global Long-term Strategy30 August 2024J P M O R G A NThis material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the territory of Mainland China.This material or any portion hereof may not be reprinted,sold or redi

2、stributed without the written consent of J.P.Morgan.Long-term StrategyAlexander Wise AC(1-212)622-Jan Loeys(1-917)602-J.P.Morgan Securities LLCPopulation aging has profound economic effects and is expected to accelerate in many countries in coming decades.In this note,we examine the likely implicati

3、ons for equity markets.We find a negative relationship between aging and equity market returns,earnings growth,valuations.Over a 10-year period,a 1%-point increase in the share of the population aged over 65 is associated with a 0.92%-point decline in the pa return on their equity market.About half

4、of this is due to a negative effect on earnings growth.Population aging should bring slower growth,which we have shown comes with slower earnings growth in DM.This slower economic growth is probably from slower workforce growth,reduced innovation and lower investment.The other half is due to a negat

5、ive effect on valuations.As shown before,population aging reduces savings as the elderly consume out of their retirement savings.It should also lead to some reallocation out of equities.Both should cheapen equities,by reducing P/E multiples.Lower earnings growth expectations could also contribute.Ag

6、ing also has an effect on currencies.Faster-aging countries thus tend to see their currencies weaker against slower-aging ones.This further decreases USD returns by a similar magnitude to earnings and valuations.The elderly also have different spending needs,with implications for equity sector perfo