Global Listed Infrastructure monthly review and outlook

Global Listed Infrastructure eased in August as investors shrugged off ongoing geopolitical tensions and rotated towards higher beta assets. The best performing infrastructure sectors included was Energy Midstream (+1%). US operators reported strong quarterly earnings underpinned by a keen appetite for natural gas, both for export to overseas markets and for domestic US electricity generation.    

The worst performing infrastructure sector was Airports (-4%), owing to regulatory uncertainty and some softness in passenger volumes. Utilities / Renewables (-4%) also lagged as mounting public opposition to data centers, and the absence of a sought-after resolution to wildfire liabilities in California, weighed on regulated US utilities.

The best performing infrastructure region was Japan (+4%), where electric utilities gained on the view that they may be given greater scope to pass rising costs on to their customers than had previously been assumed. The worst performing infrastructure region was Latin America (-4%), reflecting weakness in Mexican airport stocks.

The Fund returned -1.3% after fees in August¹, 131 basis points ahead of the FTSE Global Core Infrastructure 50/50 TR Index (SGD).   

The portfolio's best-performing holding was US liquefied natural gas (LNG) exporter Cheniere Energy (+11%). The company reported very strong June quarter earnings of US$1.8 billion – a 27% increase on the corresponding period a year earlier – and increased its 2026 earnings guidance for the second consecutive quarter. Growth was driven by higher natural gas export volumes and the ability of its uncontracted cargoes to benefit from price volatility. The company also announced that the Stage 3 expansion project for its Corpus Christi gas liquefaction facilities had been completed ahead of schedule.

Targa Resources (+9%), the largest gatherer and processor of natural gas in Texas’ Permian Basin, also delivered strong June quarter earnings, driven by higher production levels, and raised its 2026 earnings guidance. The company entered into a 20-year agreement with oil major ExxonMobil (+4%, not in our Focus List) to construct and operate three new natural gas processing plants, in a move that will further expand their partnership in the Permian basin.  Peer ONEOK (+7%) gained as investors welcomed a transaction under which it will acquire Texas-based natural gas gathering and processing company Brazos Midstream for US$4.5 billion. The transaction will be funded by a US$9 billion investment from private equity firm Apollo Global Management, with the remaining capital expected to be used to reduce debt, strengthening ONEOK’s balance sheet.

Republic Services (+5%), the second-largest provider of waste management services in the US, rose after reporting better-than-expected June quarter earnings numbers and raising earnings guidance for 2026. Cascade Investment, Bill Gates’ private investment firm and Republic’s largest shareholder, has recently added to its stake in the company. Canadian peer GFL Environmental (+2%) gained as ongoing speculation about a potential private equity takeover provided support for its share price.

North American freight rail operator Union Pacific (+3%) was buoyed by a strong July US ISM Manufacturing PMI reading, and by indications that its proposed merger with smaller peer Norfolk Southern (+3%, not held) remains on track. During the month the US Surface Transportation Board, which regulates the US freight rail industry, issued a schedule for the transaction implying that a final decision will be made in the September quarter of 2027.  Channel Tunnel operator Getlink (+2%) rallied after Virgin Trains received approval to operate passenger rail services through the Channel Tunnel to Paris, Brussels, and Amsterdam from 2030, alongside current operator Eurostar. The decision provides scope for the Channel Tunnel to become a more competitive and higher-volume rail corridor.

The portfolio's worst-performing holding was a small position in Californian electric utility PG&E (-24%), which fell after updated legislation failed to include measures that would have helped to shield the state’s utilities from costs and legal claims arising from wildfires. California’s other major regulated utilities – Edison International (-26%, not held) and Sempra (-8%, less exposed) – were also affected. Sensible portfolio risk management limited the impact from these 3 stocks to -14 basis points for the month.

Other regulated US utilities, including NextEra Energy (-5%) Public Service Enterprise Group (-4%) and Duke Energy (-4%), underperformed as deteriorating public sentiment towards new data centre projects, together with evidence of growing political opposition in Pennsylvania and Texas, continued to weigh on the sector. Many utilities’ capital expenditure and rate base growth forecasts assume significant investment associated with meeting data center and AI-driven growth in electricity demand. Remarks by the US Federal Reserve Chair at the annual Jackson Hole Economic Policy Symposium, which increased expectations of an interest rate rise in September, also weighed on these bond yield-sensitive stocks towards the end of the month.

Swiss airport operator Flughafen Zurich (-12%) fell after a slower-than-expected ramp-up in passenger volumes at India’s recently opened Noida International Airport, which Zurich operates under a 40-year concession, overshadowed otherwise solid June quarter earnings. Groupe ADP (-10%), whose principal assets are the Paris airports of Charles de Gaulle and Orly, underperformed on soft July passenger volumes and lingering uncertainty regarding the final terms of the Economic Regulation Agreement (ERA) regulatory framework, which will govern the company’s investment program between 2027 and 2034.

Japan Airport Terminal (+4%) bucked the sector’s negative trend after reporting strong June quarter earnings, aided by disciplined cost control and higher duty-free / retail spending by international passengers. The unwinding of long-standing cross-shareholdings during the month - a move which improves liquidity and removes an overhang from the stock - also proved supportive.  

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.

No new stocks were added to the portfolio in August, and positions in existing holdings were broadly maintained at current levels.   

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.

The portfolio has an overweight exposure to airports. The sector is well-positioned to benefit from several structural drivers of global travel demand; wealthy baby boomers spending more on travel in retirement, Gen Z prioritising experiences over possessions, and the expansion of middle-class populations in Asia and Latin America. While sentiment towards the sector has been affected by regulatory uncertainty, and by the ongoing conflict between the US and Iran, we believe the magnitude of the earnings impact is likely to be less severe than current market pricing implies.

The portfolio is overweight railroads through holdings in US freight rail operators and European and Japanese passenger rail companies. North American freight rail businesses represent a critical component of the continent’s transportation network and are an important part of the global listed infrastructure opportunity set. Proposed M&A activity in the sector is expected to support earnings growth by providing scope for reliability improvements, faster transit times and cost efficiencies.

Utilities / renewables make up a significant portion of the portfolio. These stocks are benefiting from unprecedented growth in electricity demand, driven by the needs of AI and data centers, as well as industrial re-shoring and a broad-based move towards electrification. Earnings growth rates for US utilities have already begun to accelerate as investment increases to meet rising power demand. We believe the long-term opportunity for utilities remains substantial, despite recent scrutiny from policymakers seeking to respond to concerns about the potential impact on customer bills. Utilities are also working to address this issue through measures such as large-load tariffs (specialised pricing structures designed for high-capacity users).

The portfolio is underweight energy midstream. Within the sector, 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 fuel source for gas-fired power generation, creating additional growth opportunities for US-based energy midstream companies.  The Ukraine and Middle East conflicts also provide opportunities for North American energy midstream companies to serve export markets by providing a relatively low cost and reliable source of LNG and Natural Gas Liquids.  

Source: Company data, First Sentier Investors, as of 31 Aug 2026.