Infrastructure plays a central role in the global economy, which is why investments in listed infrastructure companies represent opportunities for investors seeking stable long-term returns.
Closing the public expenditure gap
In the developed world, spending on the upkeep, maintenance and development of existing infrastructure has fallen far short of actual need, leaving many of these assets in near disrepair. The pressures on public finances coupled with the limited expertise of the public sector push the private sector to play a key role in the upgrading and modernization of infrastructure. With the key investment terms you can have the best options now.
Emerging markets account for almost two-thirds of demand – including a third for China – due to the rapid urbanization of these countries and rapid population growth. From China or India to Latin America, via Africa, the construction of the infrastructure necessary to improve living standards and economic growth continues to be in full swing.
However, in a world of increasing populism, infrastructure is becoming an increasingly political issue. Statements made by politicians, especially in the context of the ” One Belt, One Road ” project in China and the infrastructure program proposed by Donald Trump, make it difficult for investors to identify the real opportunities.
Benefit from structural trends
Infrastructure benefits from structural trends that have a profound influence on living conditions around the world, such as renewable energies, transport of the future, urbanization, universal connectivity, waste and water management, social and demographic changes. These structural trends not only present opportunities for long-term growth, but also have the capacity to survive electoral cycles and political promises.
Technological developments, such as the deployment of 5G networks, very high speed optical fiber, hydrogen infrastructure and magnetic levitation are no longer concepts. Each technological development will have to be based on a physical network which will allow businesses and households to access the essential services of tomorrow.
Extend traditional infrastructures to “scalable” infrastructures”
To take full advantage of the asset class, we believe investors need to broaden their horizons beyond traditional economic infrastructure, such as utilities, energy pipelines and transportation. Social infrastructure, including health and educational institutions, has similar defensive characteristics, but with assets that offer diversification benefits. Scalable infrastructures, linked to digital adaptation, offer unparalleled growth opportunities thanks to communication and transaction networks, as well as to companies operating on the royalty system.
Investments make it possible to generate considerable gains. Making good investments is therefore imperative for any company.
Within the framework of companies, there are three types of investments:
Material investment: it is all the assets that the company owns such as company cars, buildings, machines, etc.
Intangible investment: these are the sums spent to improve production.
Financial investment: these are investments in assets and shares of companies.
In addition, it is also possible to divide the investments that the company makes within its own activities into three forms:
Capacity investment: this is an investment justified by strong demand for the company’s products or by a favorable market. This means that the company invests in the purchase of equipment, with the aim of increasing its production.
Productivity investment: it is used to increase productivity by limiting expenses such as investing in the purchase of a new, faster and more economical machine.
Replacement investment: buy new equipment to replace the old one. This helps maintain the level of productivity and avoid maintenance expenses.