The financial meltdown in 2008 delayed another cycle of capital spending in the sector. Despite the current issues surrounding quantitative easing primarily in the US and Western Europe, global companies are now increasing their investment in technology solutions to improve productivity, driven by pent up demand over the previous decade. This has triggered a turnaround in the once sluggish sector. While spending might not be as robust as during the run-up to 2000, the current cycle is expected to be broad-based and focused on a wide range of products and services.
We expect the current wave of technology spending to continue at least for the next 3 – 4 years, with a direct impact on small and midcap technology companies on North American Exchanges. Our technology and services related work also extends into our infrastructure and energy focus. Many of the world’s infrastructure and energy needs cannot be met with conventional solutions as most jurisdictions grapple with decreasing natural resources and financial constraints. A new generation of solutions can include disruptive approaches to power generation, waste treatment, building materials, and overall consumption/production efficiency.
Global trade in infrastructure and energy related goods and services remains robust despite the overall health of the global economy. In fact, it is expected to grow at double the rate of global GDP over the next two decades. In addition to giving investors exposure to this growth, investments in related technology and services companies can give investors a more palatable risk exposure to many conventional infrastructure and resource sectors.
(i.e. a diverse client base for products and services vs. a more concentrated resource/geographic exposure)