Thematic Investing Blue Revolution – global water primer

Sarbjit Nahal, head of Thematic Investment Strategy - Martes, 22 de Abril

• 
• 
• 
• 
• • 
  • 
  • 

Water: a global thematic megatrend As part of our research on global megatrends, we update our thematic analysis on water with a Primer and Primer Picks reports. Water scarcity is a pressing people and planet issue – 768m people have no access to clean drinking water and 2.5bn have no access to proper sanitation. Freshwater accounts for only 2.5% of global water – and we have already reached peak water. Increasing water demand, water pollution and water stress mean that demand is set to overshoot supply by 40% in the next 20Y.

 

A perfect storm is brewing, water is the 21st century oil

The WEF has recognised water as one of top-three global risks for 2014. Further, 50% of the world’s population will be living in conditions of “water stress” by 2030 and 40% in “severe water stress” by 2050. Globally, 45% of projected 2050 GDP is at risk and as many as 50 countries are potential locations for conflicts over water. Given how closely food, water and energy security are connected, an impending “perfect storm” of events appears to be looming for the food and energy sectors, in a world constrained by extreme weather and climate change.

 

Investors need to go blue, US$600bn market & 7%+ CAGR

Water is a US$600bn market today, which is delivering a CAGR of 7%, well above global growth rates. The S&P Global Water index has delivered a 10.4% annualized performance over 10Y, and outperformed the market as well as benchmark gold, and oil & gas indices on a 1Y, 3Y, 5Y and 10Y basis. We see the fastest 3-5Y growth coming from the lowest-hanging fruits (water treatment and recycling), countries incentivising private sector actors (Brazil, China, the US), the more “crop per drop” theme, smart metering and “big data”/technology-based solutions, and water-friendly forms of energy (wind and solar).

 

Four entry points for investors, US$1tn market (2020E)

We have mapped efforts to tackle the global dynamics of water supply and demand to highlight four entry points for investors wishing to play the “Blue Revolution” theme: 1) Treatment; 2) Management; 3) Infrastructure & Supply; and 4) Water- friendly Energy. We believe these entry points will represent a combined US$1tn+ market by 2020.

 

BofAML Global Water stock list & Primer Picks

Together with our sector analysts, we have updated our list to include over 90 global stocks covered by BofAML – including 30 new names – that have exposure to water-related themes and solutions. Our Buy-rated stocks with material exposure to the theme are detailed in an accompanying Primer Picks report, as is our full stock list.

Please see full report for further details...  

Click here for the full report.* 
 

[Volver]