“The biggest investment boom in history is under way,” says The Economist. Emerging economies are set to spend $1.2trn on roads, railways, power, telecoms and other infrastructure this year – around 6% of their combined GDPs and twice the level (in relative terms) of the developed world. “Such investment will help support economic growth this year as America’s economy stalls – and for many years to
Over the next ten years, spending is likely to reach $22trn, according to Morgan Stanley analysts, around $14.5trn of which will be in Asia (the vast majority in China). Consequently, we’re set for “a huge wave of infrastructure investing”, says Michael Cembalest, chief investment officer of JP Morgan, quoted on Barrons.com, as investors pile into stocks that will benefit, such as Chinese cement makers.
What’s more, the sharp fall in Asian markets this year makes it, “an opportune time to invest long-term in Asian infrastructure stocks”, says Gillian Livingston in Globe Investor. With so much spending in store, such stocks should be profitable regardless of economic swings and American recession fears.