Demographics and asset prices

The relationship between demographics and asset prices has been a subject of increasing interest. The life cycle of investing states that as a population ages there will be a drawdown of wealth. Assets will be sold to finance consumption during retirement. Hence, we see that aging will have a negative impact on asset prices. This will be a driver in developed markets.

Nevertheless, there is a different demographic in emerging markets which have much younger populations. When there is a lower aged population there will increased demand which should be positive for commodities. There is downward pressure on financial assets in developed markets and upward pressure on commodities in emerging markets. There is also financial pressure from high liquidity from central banks. This  pressure will increase when growth returns which will negative for bonds and positive for commodities.