The Investing Opportunity in Water

“China has terrible water problems”

~ Jim Rogers

No doubt the developing world (and the developed world!) have problems ensuring that the massively growing cities in various countries need an ever-expanding supply of fresh drinking water and wastewater services.

China 3 Gorges Dam from Wikipedia

Of course many people are aware of the problems in Asia, especially in northern China where there are plans to tap the largest lake in the world in Russia to supply drinking water to the Chinese. However, people often don’t realize the level of water investment going on in the Middle East.

Hyflux*, a mid-sized water company based in Singapore reported enormous growth in their Middle East and North Africa business segment (MENA) last quarter, while their Chinese business was down (see this recent press release regarding a new contract win in Libya-pdf).

Worldwide, there is a massive need for water investment – even if we had another turn down economically, countries still need to invest in this. Sooner or later investment will be made, even in places where it might now be put off. However, with record low interest rates, many of these projects, which are debt financed, will get started.

My Take/Action Plan

Water investing could very well fit into your portfolio as part of a global growth and (possibly) income allocation. If you’re the type that would invest in global trend companies like ExxonMobil, ABB, or BIDU, then water might suit you. Some companies to consider that might be off your radar (it’s likely that Veolia, Suez, and a number of American companies are on your radar) could include Singaporean companies Hyflux, Biotreat, and Asia Environment Holdings**.

I hope you found this helpful!

If you’d like to discuss investment ideas along this line, feel free to contact me through my financial planning firm’s contact page HERE.

If you’d like my bio, click HERE.

*I personally own a small position in Hyflux. I may buy or sell shares in companies mentioned in this article at any time.

**If you are considering investing in water, consult professional advice. There will be winners and certainly losers in this business and when dealing with international investments in smaller companies, the research is not so readily available. Consider using professional advice. For my important disclosures go HERE.

  • Chris, can you elaborate on how Hyflux’s share price has performed over the time you’re held it? What are the predictions on a possible rate-of-return on this over the next couple of years?

    • I actually own a very small amount only to keep my eye on it ( – less than 0.5% of portfolio. I need to own things to pay attention to them better:)

      i bought at 2.24 for roughly a 9% gain, but when I bought it, I expected it to drop and buy more cheaper. Hasn’t happened. I think it’s fully valued at this price but would buy down in the $2 range or below.

      i am modeling some future scenarios too to see where revenues/earnings might go but I will not be buying more shares yet

  • Granted that a 9% gain is more attractive than most options over the past financial year, it’s still not attractive enough. Why would I not invest in metals instead? Had you made that same level of investment into gold – indexed or the metal – wouldn’t you have made more money? I guess I’m trying to say that perhaps water is a good investment over a 3-5 year horizon but for the 1-3 year term, it might just make sense to invest in traditional growth stocks.

  • I try not to invest for the 1-3 year time frame. That’s a trade not an investment in my mind. And for me, my precious metals position is large enough (totaling ~ 25%+ of my portfolio).

    But as I mentioned, I would not buy any more Hyflux at this point, and just keep that tiny position in my portfolio to keep it top of mind.