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Global infrastructure: a 50-year runway of growth? Editor's views

Lex Hall  |  21 May 2021Text size  Decrease  Increase  |  
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"An airport is a place where you go through hell to reach your alleged paradise.” That quote from horror writer Stewart Stafford is kind of how 4D infrastructure's Sarah Shaw feels about airports—particularly the American variety. Asked about the Biden administration’s $2.25 trillion infrastructure program, Shaw has some firm ideas on where she thinks this “pot of gold” should be spent.

“I think a great opportunity for the US if they want to spend this money is to privatise the airport network," Shaw told us this week. "The airports are horrible. Just simply doing that you’d get trillions of dollars in investment.”

One type of airport Shaw does like, however, are those further south in Mexico, which in her view are regaining their pre-covid vigour following the harsh sell-off. Shaw, who oversees 4D's global infrastructure fund, says Mexico’s airports are leading the recovery by resetting regulations, passenger forecasts and how much they expect to spend and gain. And crucially the traffic is recovering.

“They’re moving forward beyond the covid passenger hit,” Shaw says. “Secondly, they’re seeing traffic come back really, really quickly. Their traffic is only 19 per cent below 2019 levels—significantly better than what we’re seeing in other parts of the world. And that’s expected to continue. Airlines in Mexico point out that their capacity in the second quarter is 110 per cent of what it was in 2019—higher than pre-covid levels.”

Mexico and the US are discussing relaxing curbs on non-essential land border crossings from 22 June, depending on the spread of COVID-19 and how many people in both countries have been vaccinated, Mexico's foreign ministry said on Tuesday. Mexico, population 126 million, has so far administered nearly 24 million vaccine doses against covid-19.

Airports are just one part of listed global infrastructure, which Shaw thinks is the theme for the next 50 years. “The opportunity set has never been more attractive. But five years is a good timeframe to realise the investment that is happening now."

As the chief investment officer of a global infrastructure fund, Shaw is bound to say such things. But still, it's hard to be cynical, particularly when you consider the growing needs of China’s middle class—widely seen as a key source of growth. And to hear Shaw spell it out, you get an idea why that's the case. You can catch the full interview with Shaw, plus her recommendations, next week. 

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We trust you enjoy the content.

is senior editor for Morningstar Australia

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