Investment is back to basics

DRINKING water and global infrastructure have been internationally recognised as the latest must-have investments opportunities. And this trend is being embraced by the local finance industry.

At a recent Credit Suisse Investment Focus, a colleague from its Zurich office shared her expertise.

Maria Lamas, head of financial products and investment advisory, said infrastructure was one of the biggest growth industries.

She cited examples such as the 144-year-old London Underground and the 107-year-old Paris Metro as antiquated infrastructures in some of the world's most developed cities.

'In an ever-competitive marketplace, countries will need to provide reliable communication, travel and utility networks in order to support the high quality of life demanded by the population,' said Mrs Lamas.

She said major projects were in the pipeline to cope with the increasing proportion of the population living in cities.

'In the emerging markets there has been a decade of government underinvestment that is due to be corrected,' she said.

'For example, three million tons of steel is projected to be used for the 2008 Beijing Olympics, which almost corresponds to the yearly steel output of Germany, and Dubai is using 20% of the world's construction cranes as it grows and grows.'

Corresponding demands for more drinking water equally presented a great investment opportunity, she said.

Jean-Luc Le Tocq, head of relationship management and investment at Credit Suisse in Guernsey, said demand for water has quadrupled in the same time that the world's population has doubled.

'According to the United Nations, £90bn. needs to be invested annually on water supply infrastructure over the next 18 years and at Credit Suisse we have been looking at which companies could benefit from this expected investment.'

Weather experts have predicted that rainfall will increasingly be affected by climate change, with some areas in the tropics due to have less while other areas in the world are likely to get shorter, heavier bursts.

Mrs Lamas said this, together with increased consumption, meant water-saving infrastructure needed to be improved.

'Credit Suisse has identified which type of companies are likely to benefit from the predicted increased investment, such as engineering firms involved in drilling and pipeline provision,' she said.

'In areas of Europe such as Bulgaria and Slovenia up to half of the water supply is lost from urban water networks and many people are surprised to hear that it's the same scenario in London.

'Those companies involved in upgrading old or building new water supply infrastructure are also set to benefit from the predicted investment.'