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Leader in active quantitative equities across Australian equities, global equities, emerging markets and global small companies.

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Stewart Investors manage investment portfolios on behalf of our clients over the long term and have held shares in some companies for over 20 years. They launched their first investment strategy in 1988.

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Global Listed Infrastructure monthly review and outlook

Global Listed Infrastructure monthly review and outlook

A monthly review and outlook of the Global Listed Infrastructure sector.

Market review - as at March 2025

Global Listed Infrastructure gained in March as the threat of US tariffs and an unpredictable political and economic backdrop drove demand for defensive assets. The FTSE Global Core Infrastructure 50/50 index returned +2.1%, while the MSCI World index^ ended the month –4.5% lower.

The best performing infrastructure sector was Other (+6%). Satellites rose on the view that a shifting geopolitical landscape – and the loosening of Germany’s fiscal rules — may enable European operators to recover. Emerging Markets container port stocks also gained. This “risk-off” environment also drove strong performance from the more defensive segments of the global listed infrastructure opportunity set. Water / Waste (+5%) and Utilities / Renewables (+3%) stocks gained on the appeal of their lack of sensitivity to tariffs and the broader economic environment, and inelastic demand for their essential services.

The worst performing infrastructure sector was Railroads (-5%). North American freight rail stocks declined as investors sought to assess the impact that a swathe of new US tariffs — announced on President Trump’s self-proclaimed “Liberation Day” on 2nd April — may have on freight haulage volumes. Airports (-1%) also lagged, reflecting the relative sensitivity of passenger volumes to the broader economic environment.

The best performing infrastructure region was the Asia ex-Japan (+4%), led higher by gains for the region’s utility and port stocks. The worst performing infrastructure region was Canada (flat), owing primarily to lacklustre performance from its freight rail stocks.

^ MSCI World Net Total Return Index (USD) is provided for information purposes only. Index returns are net of tax. Data to 31 March 2025. Source: First Sentier Investors / Lipper IM. All stock and sector performance data expressed in local currency terms. Source: Bloomberg.

Market outlook and Strategy

The Portfolio invests in a range of listed infrastructure assets including toll roads, airports, railroads, utilities and renewables, energy midstream, wireless towers and data centres. These sectors share common characteristics, like barriers to entry and pricing power, which can provide investors with inflation-protected income and strong capital growth over the medium-term.

Trump’s early-April “Liberation Day” tariff announcement has caused turbulence in financial markets. Equity markets fell sharply on investor uncertainty and concerns about potential risks to the global economy. If the tariffs are implemented in their current form, the likeliest outcomes appear to be a period of slower economic growth and higher inflation. Typically, these conditions favour the global listed infrastructure asset class, at least in relative terms. Infrastructure growth is less dependent on the economic cycle, and many infrastructure assets have a proven ability to recover inflation. Recent falls in bond yields are also likely to prove supportive of infrastructure valuations.

At a sector level we anticipate that tariffs will have varied impacts. They are likely to be positive — at least on a relative basis — for the more defensive infrastructure sectors such as regulated utilities, mobile towers and toll roads, for the reasons noted above. Tariffs may prove challenging in the short term for some of the more economically sensitive sectors. For example, North American freight rail stocks would be sensitive to lower haulage volumes. We would note that tariff risks for Mexico and Canada — the most relevant countries to this sector outside the US — appear to have been largely priced in. Looking ahead, a key aim of the tariffs is to strengthen domestic manufacturing. The resulting onshoring drive is likely to be positive for freight rail stocks.

Energy midstream may also see a near-term slowdown as tariffs dampen energy prices, reflecting expectations of a weaker economy. However, balance sheets are in better shape than previous cycles and the sector should benefit over the medium term as domestic onshoring leads to a stronger energy demand outlook within the US, particularly for natural gas. Supply chain issues may also challenge the US renewables build-out, as the cost of imported solar panel and offshore wind farm equipment increases. Regulated US utilities should be shielded from these impacts, as their regulated business models enable rising costs to be passed through to customer bills.

Overall, we believe that the asset class remains well-positioned to perform defensively through this period of market disruption.

Source : Company data, First Sentier Investors, as of 31 March 2025.

 

Important Information

Investment involves risks, past performance is not a guide to future performance. Refer to the offering documents of the respective funds for details, including risk factors. The information contained within this material has been obtained from sources that First Sentier Investors (“FSI”) believes to be reliable and accurate at the time of issue but no representation or warranty, expressed or implied, is made as to the fairness, accuracy or completeness of the information. To the extent permitted by law, neither FSI, nor any of its associates, nor any director, officer or employee accepts any liability whatsoever for any loss arising directly or indirectly from any use of this. It does not constitute investment advice and should not be used as the basis of any investment decision, nor should it be treated as a recommendation for any investment. The information in this material may not be edited and/or reproduced in whole or in part without the prior consent of FSI.

This material is issued by First Sentier Investors (Hong Kong) Limited and has not been reviewed by the Securities and Futures Commission in Hong Kong. First Sentier Investors, FSSA Investment Managers, Stewart Investors, RQI Investors and Igneo Infrastructure Partners are the business names of First Sentier Investors (Hong Kong) Limited.

Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell the same. All securities mentioned herein may or may not form part of the holdings of FSI’s portfolios at a certain point in time, and the holdings may change over time.

First Sentier Investors (Hong Kong) Limited is part of the investment management business of First Sentier Investors, which is ultimately owned by Mitsubishi UFJ Financial Group, Inc. (“MUFG”), a global financial group. First Sentier Investors includes a number of entities in different jurisdictions.

To the extent permitted by law, MUFG and its subsidiaries are not responsible for any statement or information contained in this material. Neither MUFG nor any of its subsidiaries guarantee the performance of any investment or entity referred to in this material or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk, including loss of income and capital invested.

© First Sentier Investors Group