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Setting the investment agenda

29.06.2020

Monthly Agenda June 2020 – Alternatives

Private markets have grown more than ten-fold since the turn of the century, whilst dry powder currently stands at record levels. Back in 2000 private markets share of public markets stood at less than 2% whereas today the relative value is more than 3 times that. Crisis periods have often been highlighted as some of the best times to invest in private markets, IRRs of vintages post GFC were higher than those immediately before or after this for private equity. The growth in non-traditional transactions within private markets have also attracted many investors to the space.

Chart 15: Growth in private markets

Enlarge Source: Preqin

 

Decarbonisation is becoming an ever increasingly important issue as countries around the world strive to meet their commitments under the 2016 Paris Agreement to lower carbon emissions. Support for renewable energy projects has been increasing from both public and private investment. 2019 was a record year for Australian renewable energy construction with more than 2.2GW large-scale generation capacity added to the grid across 34 projects representing $4.3bn in investment. The ACT became just the 8th major jurisdiction worldwide to generate 100% of its energy from renewable sources, while South Australia is striving to meet this same goal by 2030. 

Chart 16: Australian wind/solar installed capacity MW

Enlarge Source: Clean Energy Council 2020 Report

 

Gold advanced for a third consecutive week hitting levels last seen in October 2012 finishing the week at US$1,769. Futures positions in the safe haven asset turned net long in recent weeks as the rally in equity markets loses pace and nervousness around increasing Covid-19 cases in some parts of the world have some investors looking to hedge their bets. Having broken above short term overhead resistance around $1,750 analysts are now calling for the precious metal to test the $1,800 level in the near term. 

Chart 17: Gold net long futures contract positions

Enlarge Source: Bloomberg

 

Darragh Kennelly
Investment Analyst

 

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