Asians are collectively getting older, and UBS says investors should take notice.

Noting that longer life is as much a factor in Asia as it is in Western countries, the Swiss investment bank said it's important for changing demographics to be taken into account when making investment decisions.

While Western baby boomers have sparked a lot of research in terms of aging, it's a topic that's been significantly less explored in Asia.

According to UBS figures, Japan, South Korea, and Hong Kong SAR are actually among the top-10 fastest-aging regions in the world.

And the mainland population is also getting older at a much faster rate than people in areas such as France and the United States.

UBS Product Manager Simon Smiles said that the number of people over 65 on the mainland has reached about 100 million. But the number is expected to hit 240 million by 2040.

That, he noted, will eventually result in a staggering reduction in the labor force.

Smiles said that the rapidly aging population will challenge governments to find ways to pay for consumption needs by seniors.

UBS Head of Asian Equities Research Julian Pickstone said that the declining size of the work force from the aging population will eventually result in a slowdown in the growth of a number of economies throughout Asia.

Smile added that the mainland's real GDP growth will fall by 1.6 percent. And that is simply because the collective population is getting older.

He warned that stagnation can be an inescapable consequence for countries where the labor pool shrinks.

"If the government fails to act within the next five years, the problem can spiral out of control," Smiles said, stressing the severity of the matter.

A structural change in terms of life insurance and compulsory retirement savings plans are needed, he said.

In noting the importance of taking into account the age demographics, UBS identified nine investment themes that will likely reap long-term benefits from aging demographics.

"The death industry is growing," Smile said. "I expect that over the coming years, there will be more companies being listed in the funeral sector, especially in South Korea, Philippines, Singapore and on the mainland."

Since healthcare represents a significant chunk of the senior population's spending, companies specializing in healthcare, life insurance and retirement investing will also benefit, according to the bank.

(HK Edition 06/25/2008 page2)