Many investment portfolios are not positioned for the major shifts in consumption that will occur in the next 10 years, according to Anatole Kaletsky, chief economist and co-founder of GaveKal Research.

At the recent G20 meeting in Pittsburgh there was growing support for the idea that the world had to rebalance its out-of-kilter economy, with the surplus countries in emerging markets needing to spend and the deficit countries in developed markets needing to save. But even if your portfolio has a large allocation to Asian equities, you’re probably holding the wrong stocks, argues Kaletsky.

This is because fund managers have tended to focus on the big manufacturing exporters in Asia, rather than domestic demand-oriented stocks such as retailers and food and beverage companies.

“We will see a dramatic decrease in consumption in the UK, US, and Southern European countries like Spain and Italy, offset by a dramatic increase in consumption in countries running a surplus, otherwise we could face a decade or more of extreme global deflation,” Kaletsky said at a London seminar for investment firm Ashburton last week.

Kaletsky said the Chinese had accepted they could not continue to rely on exporters to achieve the desired 8 percent growth in GDP per annum and therefore domestic demand would have to pick up the baton. Conversely, he sees the US economy being export-led for the next five years, meaning that US portfolios tilted towards the big consumer stocks will underperform. “Very few portfolios are positioned for this shift,” he said.