U.S. President Donald Trump’s proposed economic and fiscal policies will have an impact on infrastructure investors.
“The expected upside of many Trump policies is accelerating growth in the U.S., with the follow-on acceleration of growth in the rest of the world,” says Larry Antonatos, a managing director and portfolio manager with the Public Securities Group at Brookfield Asset Management in Chicago. “However, certain policies which limit trade may have important negative impacts on global growth.”
Antonatos’s firm, which manages the Renaissance Real Assets Private Pool, is positive on North America. The firm’s view is “that the economic growth of [the] region will outperform the rest of the world. [We’re] cautious on emerging markets, particularly Mexico, given the potential protectionist U.S. trade policies.”
He also likes specific sectors. “We are positive on energy infrastructure due to the [prospect] of reduced regulation and energy independence. We are positive on the transportation—airports, sea ports and toll roads—because of their higher sensitivity to economic growth.”
But he ‘s cautious on utilities, including “electric, gas and water utilities because of their lower sensitivity to economic growth.” Further, he says, “We are closely watching global port traffic to understand the impact of potential Trump policies that may limit trade.”
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Antonatos and his team are also watching oil and gas supply, demand and pricing. This way, they’ll better “understand the potential tailwinds and headwinds for energy infrastructure.” More broadly, he says investors should watch for geopolitical risks that could impact investments.