Global Listed Infrastructure monthly review and outlook

Global Listed Infrastructure began the year strongly as a backdrop of geopolitical volatility supported demand for defensive assets. 

The best performing infrastructure sector was Energy Midstream (+7%), which was buoyed by robust volumes and a positive earnings outlook. Higher oil and natural gas prices, owing to rising US-Iran tensions and unusually cold winter weather in the US respectively, also aided sentiment towards the sector.

The worst performing infrastructure sector was Towers / DCs (-1%). Data Centres performed well as rising earnings and bullish commentary from large-cap tech stocks augured well for data centre demand in 2026. However, Towers lagged owing to softening earnings growth expectations and longer-term concerns about competition from Direct-to-Device satellite technology.

The best performing infrastructure region was the United Kingdom (+7%), whose regulated utility stocks rose on enthusiasm for the investment and growth opportunities associated with the UK government’s aim of decarbonising the country’s electricity system by 2030. Japan (flat) was amongst the worst performing infrastructure regions, following strong gains through the 2025 calendar year. 

The Fund returned +2.3% after fees in January¹, -46 basis points behind the FTSE Global Core Infrastructure 50/50 TR Index (SGD). 

The best performing stock in the portfolio was German-listed utility and renewables developer RWE (+18%). During the month, the company won substantial UK government contracts to build and operate offshore wind farms, including Dogger Bank South off the coast of Yorkshire and Norfolk Vanguard off East Anglia. These projects contribute to the UK government’s commitment to fully decarbonise the country’s electricity. The contract terms include fixed, inflation-linked prices for the electricity generated by these wind farms for 20 years, giving RWE clear, long-term earnings visibility once the projects are completed. Danish renewables developer Ørsted (+16%) increased as the market welcomed court rulings that reversed the US government’s December suspension of five offshore wind projects. The reversal will allow Ørsted to continue work on its Revolution Wind and Sunrise Wind projects off the US northeast coast. Revolution Wind is now expected to be fully operational in 2026, with Sunrise Wind scheduled for completion in 2027.

National Grid (+8%), which operates and maintains electric and gas transmission and distribution grids in the UK and the US, also climbed during the month on the appeal of its regulated, defensive business model and inflation-linked ~5% dividend yield. The company is deriving steady earnings growth from a significant capital investment program focused on upgrading its electricity and gas networks; for example, reinforcing the high-voltage electricity network in England and Wales to enable it to handle more electricity from renewable sources. However, a holding in Californian electric utility PG&E (-4%) fell as ongoing uncertainty about future wildfire-related legislation within the state weighed on its share price.

Brazil’s largest toll road operator Motiva (+11%) rallied strongly during the month. In the absence of material stock-specific news, the increase appears to have been driven by growing investor recognition of the stock’s appealing valuation multiples. Australian-listed Atlas Arteria (+2%), which owns a 30% stake in French toll road group APRR (Autoroutes Paris-Rhin-Rhône) as well as US toll road assets, announced 9.5% revenue growth for the December quarter, underpinned by healthy traffic volumes. Early in February the company reiterated its 2025 dividend guidance of 40 cents per share, representing an attractive ~8% yield.

Japan Airport Terminal (+10%), which operates the terminals at Tokyo’s Haneda Airport, climbed on the view that earlier declines in the company’s share price - as diplomatic tensions between China and Japan reduced the number of Chinese visitors to Japan - represented an overreaction. AENA (+10%), monopoly operator of Spain’s public airport system, began the year strongly on hopes that the yet-to-be finalised terms of its regulatory framework between 2027 and 2031 were likely to be more favourable than had previously been assumed.

The worst performing stock in the portfolio was Italian mobile tower company Inwit (-6%), which underperformed on lingering concerns about its growth outlook. US mobile tower company SBA Communications (-5%) fell on news that previous customer DISH Wireless had defaulted on payment obligations to SBA peers American Tower (+2%) and Crown Castle (-2%, not held). While expected (the defaults are part of a broader dispute), the move weighed on sentiment towards these stocks.

Chinese-listed infrastructure stocks represented another area of weakness in the portfolio. Beijing Airport (-4%) dipped after announcing the outcome of its new duty-free tender. The new terms, which incorporate a higher fixed fee and a lower variable fee component, may reduce the longer-term growth rate potential of the airport’s commercial revenue. Gas utility ENN Energy (-3%) underperformed after announcing an extension to the timeframe of its proposed privatisation by parent company ENN Natural Gas. China Tower (-3%) lagged in sympathy with mobile tower peers.

¹ Fund performance is based on the Singapore unit trust, net of fees, expressed in SGD terms.
All stock and sector performance data expressed in local currency terms. Source: Bloomberg.

A position was initiated in Algonquin, the Canadian-based owner of 18 regulated electric, gas and water utilities predominantly located in the United States, plus one each in Bermuda, Chile and Canada. Its largest asset is Missouri-based Empire Electric, which accounts for ~42% of the rate base. The company is headed by a well-regarded new management team who have begun to execute a turnaround plan - improving regulatory relationships, agreeing rate cases, cutting costs and increasing the capex on which the company earns an allowed return. We believe the company’s earnings - and the valuation multiples that are attributed to those earnings - have scope to increase over coming years as this plan is carried out.

The strategy invests in a range of listed infrastructure assets including toll roads, airports, railroads, utilities and renewables, energy midstream, wireless towers and data centers. 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.

Toll roads remain the portfolio’s largest sector overweight. Their domestically focused business models give them limited direct sensitivity to tariffs or trade restrictions. Revenues are typically robust, supported by consistently high operating margins. Pricing is often linked to inflation, with negotiated compensation for additional capital expenditure. Over the medium term, additional road capacity will be needed to ease urban congestion in the developed world and to support economic development in the developing world. In the absence of sufficient government funding, toll road operators are well-positioned to meet this need.

Utilities / renewables make up a substantial part of the portfolio. These stocks are benefitting from unprecedented growth in demand for electricity, driven by the needs of AI and data centers, as well as industrial onshoring and a broad-based move towards electrification. Earnings growth rates for US utilities have already begun to accelerate due to the required investment to support greater demand for power. In the event of an economic downturn, utility earnings are likely to prove relatively resilient, owing to their regulated earnings frameworks and essential service nature.

The portfolio is underweight energy midstream. Within this space, the portfolio has overweight exposure to faster-growing US energy midstream stocks but is substantially underweight Canadian companies, which tend to have higher leverage and slower growth. Rising demand for electricity in the US, as well as being positive for utilities, is supporting demand for natural gas as a feedstock for gas-fired power plants, with scope to create additional growth opportunities for US-based energy midstream companies.

Source: Bloomberg and First Sentier Investors as at 31 January 2026.