A monthly review and outlook of the Global Listed Infrastructure sector.
Market review - as at May 2026
Global Listed Infrastructure dipped in May as optimism around a potential Middle East peace agreement and strong investor interest in forthcoming Artificial Intelligence (AI) related IPOs drove a risk-on shift across financial markets.
The best performing infrastructure sector was Other (+13%), as lower quality infrastructure assets such as satellites and Emerging Markets (EM) container ports were buoyed by upward momentum in global equity markets. Toll roads (+4%) gained on healthy traffic volumes and mergers & acquisition (M&A) developments. Airports (+3%) advanced on expectations of a possible easing of tensions between the US and Iran.
The worst performing infrastructure sector was Water / Waste (-5%). Regulated US water utilities lagged as investors favoured less defensive assets, while political uncertainty weighed on UK peers. Energy Midstream (-4%) underperformed on the view that a US / Iran agreement may reduce tension in global energy markets.
The best performing infrastructure region was Australia / NZ (+5%), reflecting gains for the region’s toll road and airport stocks. The worst performing infrastructure region was the UK (-6%), where concerns over a potential disruptive challenge to the incumbent prime minister weighed on electric and water utilities.
Market outlook and strategy
The strategy 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.
The asset class remains supported by several structural growth drivers. Electric utilities face increasing capital expenditure requirements to meet substantial increases in electricity demand driven by AI and data centre growth. In addition to providing additional power generation capacity, utilities are investing to expand, modernise and strengthen their electricity transmission and distribution grids. Under US utility regulation, higher amounts of capex deployed in this way typically leads to rate base growth, which ultimately supports higher earnings growth. Robust US utility earnings for the March quarter of 2026 indicate that higher demand growth is already providing a tailwind to earnings.
Digitalisation is another key theme for the asset class. Data centers benefit from companies seeking the improved reliability and flexibility offered by migrating IT equipment from on-premises to a combination of colocation services and cloud computing. Additionally, the surge of interest in AI is driving data center demand, as well as increasing demand for electricity. We expect structural growth in demand for mobile data, underpinned by increasing reliance on digital connectivity, to support steady revenue growth in the mobile tower sector. While recent consolidation activity within the US, Spanish, French and Italian telecom sectors (mobile towers’ primary customer base) has raised concerns about customer churn rates, longer-term growth drivers remain. The adoption of 5G technology over coming years will require networks to handle increased data speed, lower latency, and a significantly greater number of connected devices.
Airports appear well-positioned to benefit from the ongoing drivers behind global travel demand growth, including wealthy baby boomers with disposable income to spend on travel during their retirement, Gen Z prioritising experiences over possessions, and the expansion of middle-class populations in Asia and Latin America. While airport stocks have lagged since the outbreak of hostilities between the US and Iran, we believe the magnitude of the earnings impact is likely to be less severe than current market pricing implies.
Continued M&A activity and the potential divestment of non-core assets represent additional sources of support for valuation multiples across the asset class. Recent months have seen elevated levels of corporate activity, driven by industry consolidation (most recently the large-scale merger proposal between Dominion Energy and NextEra Energy) as well as the acquisition of public market assets by private market operators. We expect this trend to continue, supported by a pro-business US administration, strong demand for infrastructure assets and rising financing needs for global listed infrastructure investment programs.
Source: Bloomberg and First Sentier Investors as at 30 April 2026.
Global Listed Infrastructure
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Investing in global listed infrastructure can offer inflation-protected income and steady capital growth from real assets delivering essential services. We search for best-in-class assets worldwide with high barriers to entry, structural growth and pricing power.
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