Global Listed Infrastructure monthly review and outlook

Global Listed Infrastructure rallied strongly during February, buoyed by investor demand for assets deemed less vulnerable to disruption by Artificial Intelligence (AI). The best performing infrastructure sector was Railroads (+12%), with North American freight rail stocks buoyed by an unexpectedly positive US manufacturing PMI reading for January. Improving manufacturing sentiment bodes well for future freight haulage volumes. 

Energy Midstream (+11%) also outperformed in February, aided by solid December quarter earnings and a positive demand outlook for North American energy storage and transportation services.

The worst performing infrastructure sectors included Airports (+3%), which delivered relatively muted gains following lacklustre December quarter earnings and an outburst of cartel-related violence that weighed on sentiment towards Mexican operators.

The best performing infrastructure region was Canada (+12%), reflecting strong gains from its freight rail and energy midstream stocks. The worst performing infrastructure region was Latin America (+1%), where toll roads and airports lagged following strong returns over recent months. 

The Fund returned +2.3% after fees in January¹, -183 basis points behind the FTSE Global Core Infrastructure 50/50 TR Index (SGD).  

The best performing stock in the portfolio was US regulated utility Pacific Gas and Electric (PG&E) (+23%), which serves 5.3 million electric and 4.6 million natural gas customers across its northern and central California service territory. The company operates extensive electric and gas transmission and distribution networks, alongside a 7.6-gigawatt (GW) fleet of regulated generation assets. Its share price gained on a favourable reaction to the latest policy recommendations for wildfire legislation from the California Public Utilities Commission (the state’s utility regulator), including proposals that responsibility for future wildfire-related costs should be more effectively shared between utility ratepayers and other parties.  

Other strong-performing US utility holdings included American Electric Power (+13%) and Sempra (+11%). Both companies reported significant increases to their capital investment plans (with positive implications for earnings), driven primarily by large-scale data center construction and the resulting rise in forecast demand for electricity in Texas. Sempra’s Texas business unit ONCOR raised its five-year capex plan from ~US$36 billion over the five years to 2029, to approximately US$48 billion over the five years to 2030. American Electric Power now expects to spend US$72 billion of capex between 2026 and 2030, with a meaningful portion of this total to be spent in Texas on transmission grid expansion, new generation and electricity distribution network upgrades.  

US-listed data centre operator Equinix (+19%) rallied after announcing healthy December quarter earnings, aided by very strong customer demand for its colocation data centre capacity and burgeoning enterprise AI deployments. Better-than-expected earnings growth guidance for 2026 of 8-10%, and bullish commentary on AI-driven demand for its data centres, provided additional support for its stock price.

Energy midstream stock Targa Resources (+17%), which operates one of Texas’ largest gathering and processing networks for natural gas and Natural Gas Liquids (NGLs), along with extensive energy storage, transportation and processing assets across the US Gulf Coast, also outperformed. December quarter earnings were ahead of market consensus, reflecting strong volumes and higher margins in its marketing segment. US Liquefied Natural Gas (LNG) exporter Cheniere Energy (+12%) reported better-than-expected earnings for the December quarter and announced a US$10 billion share buyback program. The company also highlighted a new 25-year contract to deliver a further 1.2 million tons of LNG annually to existing Taiwanese customer CPC Corporation. Holdings in US energy midstream operators DT Midstream (10%) and ONEOK (+6%) were buoyed by favourable hydrocarbon demand dynamics.

The worst performing stock in the portfolio was Beijing Airport (-12%) which fell on persistent concerns about the pace of passenger recovery and the rate of duty free spend at its terminals. Having delivered strong share price gains over the past two years, Mexican peer GAP (-6%) underperformed as cost pressures weighed on 2025 earnings. A flare-up of cartel-related violence during the month, which resulted in flight cancellations and diversions, also weighed on sentiment towards the Mexican airport sector. US gas utility and energy midstream stock UGI Corp (-7%) represented another area of softness in the portfolio. Investors took profits after December quarter earnings were lower than expected, as the positive drivers of cold weather and favourable currency movements were outweighed by higher costs.

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 Canada’s largest freight railway company Canadian National Railway, which operates a ~20,000-mile rail network connecting the Atlantic and Pacific oceans, and the US Gulf Coast. The stock was added to the portfolio after a series of headwinds – including repeated earnings downgrades, US tariff impacts, and concerns about increased competition potential from merged Union Pacific / Norfolk Southern operations – saw its stock trade down to a meaningful discount to peers. We believe these risks are now reflected in the current share price and that its multiple can begin to recover as it carries out a share buyback program, continues to demonstrate incremental operational improvements and meets its currently undemanding earnings guidance.  

Italian tower operator INWIT was divested on concerns about a slowing growth outlook. German-listed utility and renewables developer RWE was also sold after strong gains during the portfolio’s holding period reduced mispricing and moved the stock to a lower ranking within our investment process.   

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 end of February / early March saw a sharp increase in geopolitical uncertainty as Israel and the US launched a military operation against Iran. While the situation remains fluid, unfolding events have several potential implications for global listed infrastructure.

The airports sector is likely to be the most sensitive to ongoing conflict in the region, as regional disruption reduces willingness to travel. A sustained higher oil price leading to higher airfares would also represent a headwind for airport volumes. The portfolio does not hold any airport stocks with material direct exposure to the Middle East.

Conversely, higher energy prices are likely to prove supportive of US energy midstream stocks. Iranian attacks on crucial energy infrastructure in the region, or the closure of the Strait of Hormuz in the Persian Gulf, could push oil and natural gas prices higher. In the near term, US LNG exporter Cheniere Energy could benefit if Qatari LNG customers begin to seek alternative sources of supply. Other portfolio holdings with (marginal) LNG exposure include Sempra and ENN Energy. Over the longer term, a higher oil price would encourage more production from upstream customers, requiring more gathering, processing, transport, storage, and export infrastructure.

In other sectors, utilities will need to manage the impact that higher energy costs may have on customer bills. Within this space the portfolio is predominantly focused on US regulated utilities, which should be less affected than European or Asian peers. Over the longer term, an extended period of higher natural gas prices would reinforce the trend towards renewable energy, which would be supportive for portfolio holdings including Ørsted (offshore wind), National Grid (transmission) and NextEra Energy (US renewables). Disruption to global trade may also affect port stocks, which are not held by the portfolio.

More broadly, higher energy prices stemming from an extended period of conflict in the Middle East could push inflation higher and exert pressure on central banks to raise interest rates. We are confident that most infrastructure companies would be able to pass through the effects of higher inflation to consumers, via regulated or contracted pricing.

If the Iran conflict were to extend beyond a few weeks and have more significant impacts on economies and markets, global listed infrastructure would appear relatively well placed. The portfolio is domestically focused and should be largely immune from uncertainty in the Middle East region. We would expect ongoing rotation into defensive sectors, which has been a supportive trend so far this year. We note that during previous market downturns, global listed infrastructure’s beta to global equities has typically ranged between 0.5 and 0.6.

Source: Bloomberg and First Sentier Investors as at 28 February 2026.