Asset manager says bet on future scarcities
Reuters 3 Jan 08;
LONDON (Reuters) - Companies specializing in recycling or renewable energy could be a good investment in coming years as the world's population soars and vital resources become more scarce, Dutch asset manager Robeco said on Thursday.
Over 9 billion people are expected to compete for the globe's resources by 2050, up from a population of around 6.6 billion currently, according to the United Nations.
"Many commodities which have been freely available for a long time, such as land, air and water, will become scarce and expensive," Lex Hoogduin, chief economist at Robeco, said in a note.
This will lead to much higher inflation and thus spell the end of relatively low interest rates, making long-term government bonds a less attractive buy. But it will also open new investment opportunities.
"Equity investors should opt for companies which process goods that are likely to become scarce and for companies which develop technologies designed to make more efficient use of natural resources," Hoogduin said.
That could include recycling firms, those focusing on solar or wind energy, biotech companies producing genetically modified crops and sellers of bottled water.
Producers of the scarce resources, such as mining companies and their suppliers, may also be good investments.
With most of the population growth coming from less developed countries, and with emerging market commodity producers such as Russia able to cash in on the higher prices while importers like the euro zone suffer, the developed Western world will likely see its share of global wealth reduced.
As a result, Robeco suggests that emerging markets may offer attractive opportunities for profit-seekers.
Another demographic trend -- an aging population -- could boost returns from health care companies, whether they offer drugs, diagnostics or healthy lifestyle products.
A richer and bigger population could also lead to an increase in pollution.
"Given the current political support for the necessary reduction in carbon dioxide emissions, the future prospects for carbon dioxide storage and emission rights are also favorable," Hoogduin said.
As the asset management centre of privately-owned Rabobank, Robeco manages about 150 billion euros ($221 billion) in assets worldwide.
(Reporting by Toni Vorobyova; Editing by Ruth Pitchford)
