Health care, automation, financial services, and age-inclusive leisure are key sectors poised for growth amid demographic shifts and evolving market dynamics, said Ka Shi Lau, chairman of the Hong Kong Trustees’ Association, in an email to Markets Group.
Lau noted fund managers are repositioning portfolios to capture these opportunity sectors while managing liquidity and navigating heightened geopolitical and macroeconomic risks.
“Healthcare innovation, biotech, diagnostics, and senior housing [real estate investment trusts] are clear beneficiaries of an aging global population,” said Lau. “Automation and robotics, along with enterprise software, are critical to offset labor shortages and drive productivity gains.”
Financial services, particularly income-focused products and longevity-linked annuities, are also evolving to meet the demands of retirees, she added, noting travel and leisure sectors catering to older consumers represent untapped potential. This thematic shift reflects deeper structural changes.
“Longer lifespans increase demand for long-duration, income-generating assets, which supports both bond and equity valuations.”
However, slower productivity growth and rising fiscal burdens in aging societies present ongoing challenges, said Lau. The macroeconomic environment, shaped by higher interest rates and slowing global growth, adds complexity. “With the return of positive real yields — especially in investment-grade and short-duration bonds — fixed income is reclaiming a central role. Managing duration risk while capturing yield is key.”
In equities, Lau advocates a defensive stance, noting the association favors quality and dividend-growth stocks. “Equity valuations remain vulnerable to earnings disappointments amid inflationary pressures and growth uncertainties.”
Fund managers are balancing these themes within a disciplined liquidity framework. “The liquidity-illiquidity spectrum remains central to portfolio construction,” said the chairman.
While private markets still offer diversification and illiquidity premiums, higher rates have compressed these premiums in some areas, notably large-cap buyouts. “Energy transition infrastructure and selective venture capital remain pockets of value, but stress-testing across multiple market scenarios is essential to ensure resilience.”
Lau also flagged clear losers amid these shifts: labor-intensive industries such as construction, manufacturing, and agriculture face tightening labor pools, while consumer brands focused on younger demographics risk losing relevance. Public defined-benefit pension plans confront mounting underfunding issues as retiree numbers swell.
Artificial intelligence (AI), Lau emphasized, is a transformative force reshaping earnings and business models across sectors. She added that in information technology and software, AI is driving automation and innovation, enhancing coding efficiency and reducing costs. “Healthcare benefits from faster drug discovery, improved diagnostics, and imaging technologies. Financial services leverage AI for robo-advisory platforms, underwriting, and fraud detection. Industrials use AI for supply chain visibility and predictive maintenance.”
However, Lau cautioned that separating hype from genuine investable opportunities is critical for long-term success.
Geopolitical risk remains Lau’s foremost concern looking out over the next 10 to 20 years. “The unpredictability of geopolitical fragmentation, financial weaponization through sanctions, resource nationalism, and cyber threats pose systemic risks to globalization and capital markets.”
“These trends risk disrupting global supply chains, fragmenting financial markets, and altering capital flows and risk premia in fundamental ways.” The growing strategic control over food, energy, and mineral resources, combined with cyber vulnerabilities, could profoundly impact investment stability and returns.
Sustainability remains a key focus for Lau, who believes that integrating Environmental, Social, and Governance considerations is a fundamental part of fiduciary responsibility. She emphasizes that ESG risks are inherently investment risks, and incorporating these factors consistently into core analysis helps prevent costly mistakes and identify companies with lasting competitive strengths. Engaging proactively with company management on important, sector-specific ESG challenges is crucial to driving long-term value.
