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.