US infrastructure could be the next great investment opportunity for institutional investors, according to investment strategists.
Speaking at the annual Uhlenbruch conference in Zurich today, Prof Thomas Straubhaar of the University of Hamburg painted a positive picture of the US infrastructure investment environment under president-elect Donald Trump.
Straubhaar said: “Trump said more than $1trn [€930bn] is going to be invested in US infrastructure. It looks a wonderful investment opportunity.”
Funding is likely to come from private funds, he said, as public funds could prove politically difficult to secure.
“We have been suffering because there are not many stable, profitable opportunities,” he said. “We have negative real yields on German and Swiss government bonds.”
US infrastructure funds are likely to produce stable returns, Straubhaar said.
Regardless of individuals’ views of Trump, he said the infrastructure renewal programme was “not to be underestimated”.
“We must use our minds rather than our gut instincts,” he said.
Christoph Schenk, CIO at Zürcher Kantonalbank, added that Trump could be “a catalyst that can get us out of dire straits” with this form of stimulus.
Outside the US, German and Swiss companies are most likely to benefit from increased infrastructure spending.
“Who builds better tunnels than the Swiss?” Straubhaar said, referring to the Gotthard Base Tunnel, the longest railway tunnel in the world, which opened in June.
Candriam Investors Group last week estimated equity stakes in infrastructure projects could represent $167bn in aggregate.
Ina note by Anton Brender, chief economist, and Florence Pisani, head of economic research, Candriam said: “This could mean $100bn of additional infrastructure spending per year over the next 10 years and should provide a one-off boost to domestic aggregate demand of around 0.5% of GDP.”