I got a minor shock when I found these two charts:

This is a Research Affiliates paper so it carries extremely high credibility. The paper arrives at this forecast via a complicated route – forecasting GDP per capita growth instead of simply GDP. Also it takes the assumption that “Young people are focused on investing in stocks and providing goods and services to the market; old people are focused on pulling equity capital from the markets, investing in bonds, and consuming goods and services.”

Basically, I’ve seen this hypothesis a dozen times. Higher dependency ratio = bad for stock returns. i.e. Japan. Vice versa i.e. China.

Isn’t Singapore supposed to have a terrible birth rate? Doesn’t that translate into a high dependency ratio in future? Well, according to Singstat we still have a pretty decent “beehive shaped” ratio, surely …