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Andrew Little, Global X

What the US’s infrastructure bill could mean for infrastructure investors

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Andrew Little, Research Analyst at Global X, has written an extensive note on Biden’s Infrastructure Investment & Jobs Act and its potential impact for investors.

In terms of investments, the bill would invest USD260 billion plus in transportation & transit, almost USD90 billion in clean technologies, USD84 billion in water infrastructure, and USD100 billion in digital infrastructure and infrastructure resilience.

Turning to funding, Little comments that the bill seeks to fund spending without raising the deficit by auctioning off portions of the 5G spectrum, Strategic Petroleum Reserve sales, increasing customs fees, red tape removal, economic growth, and more.

Little writes that the path to enactment will mean that the bill is likely to stay with the House of Representatives until they can also vote on a potential USD3.5 trillion budget reconciliation bill which invests in social infrastructure, buildings, and clean energy.

As for potential beneficiaries, Little writes that these are likely to include infrastructure development companies including those involved in construction and engineering services, raw materials and composites, products and equipment, and industrial transportation.
Other thematic beneficiaries could be drawn from the Internet of Things and Autonomous & Electric Vehicles themes, Little says. All of these could benefit from funding directed to connected cars, sensor-based infrastructure, transit integration, commerce delivery and logistics, and smart traffic.

The CleanTech, Renewable Energy and Autonomous & Electric Vehicles, Hydrogen themes could benefit from increased electrification and emissions reduction efforts across transportation areas, as well from improvements to energy efficiency and funding for smart grids.
The Renewable Energy and Hydrogen themes could benefit from federal support and/or investment in clean energy sources and green hydrogen.

The Clean Water theme could benefit from investment in clean water infrastructure, including federal investment in water distribution, water filtration and treatment, wastewater management, and new water extraction methods like desalination.

The Cybersecurity and Digital Infrastructure themes could benefit from increased spending on cybersecurity and digital infrastructure like broadband.

Little writes: “Infrastructure in the United States is chronically underfunded and deteriorating. The Infrastructure Investment and Jobs Act represents the most significant investment in infrastructure in the country’s history and would serve as a remedy to these issues for many years to come if it is enacted into law. 

“The potential for additional spending on clean energy and social infrastructure would take this a step further and could reshape the future of the United States. In our view, such spending will translate to revenues for companies involved in infrastructure development and that derive a significant share of their revenues from the US.”

 

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