Infrastructure equities performed extremely well in 2019, with our infrastructure fund up more than 30% over the year – not bad for an asset class providing stable, predictable cash flows. It continued in a similar vein at the start of 2020, but then coronavirus hit and things became more volatile. So after a turbulent year, what factors should infrastructure investors be looking out for in 2021?
Although the listed infrastructure market will probably remain volatile in the short term, the potential for infrastructure investments is obvious over a longer time horizon. There’s huge need for infrastructure around the world, driven by a number of megatrends such as digitalisation, the energy transition, urbanisation and smart cities.
Stimulus to support infrastructure in 2021
After the vast amount of monetary stimulus to support the global economy we’ve seen in recent years, we’re likely to see more fiscal stimulus next year. Infrastructure investment is an obvious way of further boosting the economy.
In the US and Europe, existing infrastructure will have to be improved and new assets will have to be built. And of course there’s likely to be huge further infrastructure investment in China, where USD 2.5 trillion of infrastructure investment is planned over the five years to 20251 across a range of sectors. China has recently committed to go carbon-neutral by 2060 – a huge undertaking.