Infrastructure
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Five Thousand Pounds of Steel are Falling
October 30, 2009
Drivers on San Francisco’s Bay Bridge were greeted by 5,000 pounds of metal on Wednesday when a recently repaired eyebar snapped under pressure from high winds.
Unlike the 2007 bridge collapse tragedy in Minneapolis, no one was killed and only one motorist suffered minor injuries. A lucky break since the accident happened during rush hour on a bridge that services 280,000 commuters every day.
This isn’t the first newsworthy item in the Bay Bridge’s history, as a 50-foot section of the upper level collapsed onto the bottom level during the 1989 Loma Prieta earthquake. The image was quickly beamed to millions of homes around the U.S. as they were tuning in for Game 2 of the World Series.
Though a major disaster was averted this time, the clock is ticking unless measures are taken to rebuild, reinforce and restore America’s crumbling infrastructure.
One in four of America’s bridges are either structurally deficient or functionally obsolete, according to the American Society of Civil Engineers. Overall, they rate America’s 600,000 bridges a "D." The ASCE estimates there is a nearly a $7 billion gap between what is needed to be invested in order to improve conditions versus what actually is being invested.
Hopefully, that and similar domestic infrastructure spending gaps will start to close before the problem becomes a crisis.
All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. #09-760
Big Cities, Big Opportunities
October 23, 2009
One of the biggest drivers of global infrastructure is the rapid rate of urbanization experienced in the developing world.
The reason is simple – roughly 70 million people per year in developing countries are moving to cities, so there will need to be more roads, water systems, housing and electrical generation.
Nowhere is this trend more apparent than in China, which already has 100 cities with more than 1 million people. It is expected to eventually have 30 cities with more than 10 million people.
As you can see in the chart from UBS, Asia will be the main source of this urban growth. The United Nations says that over 1 billion Asian people will move to urban areas by 2030. Another 500 million people are expected to migrate to urban areas in Africa.
While this trend has picked up in pace in recent years, the growth of urban centers in the developing world has already been an established trend. Of the 20 largest urban areas in the world in 2005, only four were in the developed world (Tokyo, New York, Los Angeles and Osaka, Japan).
The infrastructure build-out truly is a global opportunity. As much of the infrastructure focus in the developed world centers around repair and replacement, the focus in the developing world is around providing people with basic needs taken for granted by many of us.
We believe emerging-market governments that commit to ambitious infrastructure programs will be the ones with the best economic growth prospects in the coming years.
All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. #09-740
A New Way of Thinking About Infrastructure
October 19, 2009
We don’t often talk about the U.S. Global Investors mutual funds in this blog, but this time it’s warranted because we believe we’re at the front end of a wider trend.
BusinessWeek’s web site has posted a good story today about how infrastructure investment is being redefined – as the world grows and technology changes, no longer is this sector limited to the traditional plays of construction and engineering companies, utilities and the like.
Jack Dzierwa, one of the managers of our Global MegaTrends Fund (MEGAX), was among the fund managers interviewed for this informative story.
Jack discussed how the fund’s management team takes a wide view of what constitutes global infrastructure – privatized airports, alternative energy, water and telecommunications are among the investment possibilities.
He also focused on the U.S. Global view that the infrastructure opportunity is especially attractive in emerging markets, given their higher growth rates and their need to build out their infrastructure to be globally competitive.
Read the Global Infrastructure Story
Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.
| Fund | One-Year | Five-Year | Ten-Year | Gross Expense Ratio |
|---|---|---|---|---|
| Global MegaTrends | -11.00% | -0.28% | 1.50% | 2.28% |
Gross expense ratio as stated in the most recent prospectus. Performance data quoted above is historical. Past performance is no guarantee of future results. Results reflect the reinvestment of dividends and other earnings. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Performance does not include the effect of any direct fees described in the fund’s prospectus (e.g., short-term trading fees of 0.25%) which, if applicable, would lower your total returns. Obtain performance data current to the most recent month-end at www.usfunds.com or 1-800-US-FUNDS.
By clicking the link in this article, you will be redirected to a third-party website. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content.
Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. Holdings in the Global MegaTrends Fund as a percentage of net assets as of September 30. 2009: SNC Lavalin Group 1.54%, Cohen & Steers Capital Management 0.0%, Empresas ICA 0.0%, Companhia de Concessoes Rodoviarias 0.0%, Cascal NV 0.0%, Eutelsat Communications 0.0%, SES SA 0.0%, American Tower Corp. 0.0%, Vivo Participacoes SA 2.16%, Grupo Aeroportuario del Sureste SA B de CV 2.92%, Alpine Global Infrastructure Fund 0.0%, Cohen & Steers Global Infrastructure Fund 0.0% #09-726
Poor Infrastructure a Pothole for Russian Economy
August 27, 2009
The deadly collapse of a freeway bridge in Minneapolis in 2007 brought to national attention that our vital infrastructure was falling apart.
Perhaps last week’s disaster at a major hydroelectric power station in Siberia that killed 69 people will get Russia moving to update its crumbling infrastructure. But the challenges are many.
The vast majority of Russia’s roads, bridges, railways and power grid date back to the Cold War era, and it’s estimated that more than 60 percent need to be replaced.
Heat and power outages during winter months are common, and Moscow is plagued with world-class traffic-jams. But at least Muscovites have places to drive—as of last year, more than 10 percent of the country’s population had no access to roads at all.
And while other BRIC (Brazil, Russia, India and China) nations have rapidly expanded their highways and rail systems over the past several years, the length of Russia’s usable roads actually declined by 31,000 kilometers (19,375 miles) from 2000 to 2006.
Safety and quality of life aren’t the only reasons Russia should invest heavily in its infrastructure. Looking at the economics, estimates are that annual GDP growth is reduced by up to 6 percent by the country’s poor infrastructure.
One infrastructure challenge facing Russia is its government incompetence and “unfathomable levels of corruption” that add huge cost to projects, according to the Moscow-based Center for Research of Post-Industrial Studies.
It cites figures that the cost of building one kilometer of a four-lane highway in Russia is about $13 million, about four times that of Brazil or China. For some sections of a highway connecting Moscow and St. Petersburg, the construction cost exceeded $130 million per kilometer due to government waste and palm-greasing.
Another problem is finding the big sums needed to get the work done. Prime Minister Putin proposed a 10-year, $1 trillion plan last year but that was prior to fallout in global markets and commodities.
Since then, more than $13 billion in infrastructure projects have been delayed or canceled, with the government spending most of the money earmarked for infrastructure on shoring up the country’s banking system instead. Rather than embarking on a comprehensive upgrade program, Putin now pledges to address “vital parts” of Russia’s infrastructure.
This means much of the funding for Russia’s infrastructure repairs will need to come from public-private partnerships (PPPs) and other innovative non-government sources. But these projects too will be vulnerable to costly corruption demands involving political entities and bureaucrats that would cut returns to investors.
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What’s New in Global Markets
June 18, 2009
Many years ago, when I first traveled to China, the presence of construction cranes as far as the eye could see really solidified in my mind that something special and enduring was going on there.
With the power of first-hand experience in mind, we’ve set up a webcast double feature for investors.
Next Thursday, I will share what I’ve learned on recent trips to Europe and Asia. What signs of recovery are out there? Have the actions of global governments been enough to pump life back into these economies?
And on Friday, my good friend Andy Rothman, CLSA’s China macro strategist, will fill you in on what’s happening on the ground in China.
Has the Beijing government’s infrastructure-focused stimulus been effective as reported? Will more stimulus be needed for growth to continue in the second half of 2009?
Andy is one of the most knowledgeable sources on China. He spent 17 years following China’s economic policy while working in the U.S. foreign service. He’s been CLSA’s China macro strategist since 2000.
I urge you to take advantage of this opportunity to expand your global perspective. Registration for both webcasts is below.
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Thursday, June 25, 2009
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Friday, June 26, 2009
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I also wanted to share with you a slideshow of ongoing construction projects in China that I found on wallpaper.com. It’s really interesting to see how the unique Chinese culture mixes with the rapid changes that are taking place.
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Net Asset Value
as of 11/19/2009
- Global Resources Fund
PSPFX $8.59 -0.15 - Gold and Precious Metals Fund
USERX $16.13 +0.01 - World Precious Minerals Fund
UNWPX $17.99 +0.02 - China Region Fund
USCOX $8.24 -0.12 - Eastern European Fund
EUROX $9.07 -0.17 - Global Emerging Markets Fund
GEMFX $7.96 -0.11 - Global MegaTrends Fund
MEGAX $7.98 -0.07 - All American Equity Fund
GBTFX $19.31 -0.30 - Holmes Growth Fund
ACBGX $15.18 -0.23 - Tax Free Fund
USUTX $12.23 +0.02 - Near-Term Tax Free Fund
NEARX $2.22 No Change - U.S. Government Securities Savings Fund
UGSXX $1.00 No Change - U.S. Treasury Securities Cash Fund
USTXX $1.00 No Change