Should I Sell Stocks... "Aging Population Is a Negative Factor for the Stock Market"

JPMorgan Analyzes the Relationship Between Aging Population and Stock Market

The global trend of population aging has been analyzed as a negative factor for the stock market.

According to the US economic media CNBC on the 5th (local time), JP Morgan stated in a recent report that "aging has been found to have a negative relationship with corporate earnings and growth," and that aging will be a factor increasing downward pressure on stock prices.

JP Morgan's analysis was conducted amid the rapid aging of major countries worldwide. According to JP Morgan, within the next 10 years, the proportion of the population aged 65 and over is expected to increase from the current 18.1% to 21.5% in the United States, and from 14.6% to 21.6% in China. When the proportion of the population aged 65 and over exceeds 20%, it is considered to have entered a super-aged society.

JP Morgan revealed that when the elderly population proportion increases by 1 percentage point over 10 years, the annual average return of the overall stock market decreases by 0.92 percentage points. Alexander Wise, a JP Morgan strategist, explained, "This effect arises from slower earnings growth and reduced valuation due to aging." He added, "The impact of aging on the stock market showed quite similar results regardless of the size of the country."

There are several reasons why population aging negatively affects the stock market. First, it is explained that it lowers corporate productivity and innovation, thereby hindering economic growth. According to JP Morgan's analysis, whenever the proportion of the population aged 65 and over increases by 1 percentage point, GDP per worker decreases by 0.58 percentage points. This naturally reflects in the valuation of corporate stock.

JP Morgan also pointed out that as the population ages, governments incur significant debt due to pension payments, which is another negative factor for the stock market. As countries issue more bonds, interest rates rise, which can lead investors to withdraw from risky assets such as stocks.

JP Morgan also viewed that the tendency to reduce the proportion of stocks in assets as people age will exert downward pressure on stock prices.

JP Morgan predicted that stocks related to healthcare and medical services will be promising due to population aging. Strategist Wise stated, "Over the next 10 years, when the proportion of the population aged 65 and over increases by 1 percentage point, the annual average return of this sector was 0.85 percentage points higher than the overall market," confirming "a relationship where excess returns in the healthcare sector occur as aging progresses."

This content was produced with the assistance of AI translation services.