Despite ongoing global political and economic headwinds, the value proposition of quality infrastructure projects in some Asian nations is very attractive, according to Sarah Shaw, global portfolio manager and CEO/CIO at 4D Infrastructure.

The rise of the middle class remains a core theme across Asia, coupled with a global desire for a greener future and increasing usage of technology, which makes for a huge infrastructure investment opportunity across the region, said Ms Shaw. Conversations with management teams from regulated utilities, communications and transport companies in Indonesia, Malaysia, Thailand, Hong Kong and China reaffirmed this view.

“Rapid population growth and the expanding middle class in Asia is driving the need for infrastructure. As personal incomes rise, so does the expected standard of living, triggering a demand for essential utilities – such as clean water, waste services and power – and progressing to services that support efficiency and a better quality of life, such as roads, airports and communication.

“From an investment perspective, infrastructure investors can capitalise across the entire value chain.

“In the toll road space both passenger and heavy vehicle travel momentum are supported by a growing middle class and improving economic outlook. Further, the opportunity for more growth in the sector provides additional potential upside – roads are core to the economic evolution happening in Asia right now. We favour Indonesian toll road operator Jasa Marga and the Chinese operators exposed to the relatively resilient Tier 1 cities such as Shenzhen International,” she said.

In terms of airports, Asian traffic is recovering after a slower start to the post COVID rebound than that experienced by developed nations.

“Both in-bound, out-bound and domestic traffic momentum remains buoyant, supporting both economics and infrastructure names. In particular, we like the airports in Malaysia and the airports of Thailand, with growing levels of tourism.”

In terms of communications, while the opportunity set of 5G and data is universal, the ability to capitalise on the growth of technology varies across Asia.

“We favour Mitratel in Indonesia who has the geographic footprint, asset quality, balance sheet and strong management team to truly capitalise on the opportunity,” Ms Shaw said.

In terms of the global opportunity set of a greener future, the 2050 target of Net Zero is impossible without the emerging world, and in particular Asia investing in the theme.

“The opportunity set for infrastructure investors to support the energy transition is huge and within Asia we are capitalising on this through investments in the grids as well as the water sector, both of which require growing levels of investment.”

In terms of investment, infrastructure offers investors defensive and resilient earnings but with significant potential for growth given the huge and growing need for investment globally.

“This is due to a chronic underspend on infrastructure globally over the past 30 years as well as the changing dynamics of the global population.

“Like most investors, of key importance to our investment decision is fundamental value, total return and quality. As always, we maintain a diversified portfolio of high-quality infrastructure names globally, and at the moment, believe parts of Asia are offering an attractive mix of quality and value,” Ms Shaw said.