An Investment Theme Awash with Opportunity

May 6, 2011

Richard Blackwell

Water is a commodity that many take for granted, but transporting it, cleaning it and selling it will create increasingly important investment opportunities in the years ahead.

As the world’s population increases, the demand for fresh water for drinking, agriculture and industry is going to accelerate, especially in developing countries. At the same time, water pipes and other infrastructure in the developed world will deteriorate further, requiring massive new spending, some of which will flow through the private sector.

Over all, there’s going to be more spending on water infrastructure over the next 20 years than on any other segment of the economy, including power production, said Khurram Malik, an analyst at Jacob Securities Inc. in Toronto. That spending, up to $1-trillion (U.S.) a year, will create huge opportunities for companies in the water business, and their investors.

“If you look at the fundamentals of water over a long period of time, it’s a great place to be,” Mr. Malik said. “Compared to any other sector in the global economy, you’re going to be hard pressed to find something with better macro fundamentals.”

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