Global Listed Infrastructure monthly review and outlook

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 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.

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.