Claire Long, manager of the Premier Global Power and Water fund, explains why rather than creating risk, regulation can drive earnings visibility and dividend sustainability - regardless of economics.
With demand for electricity in developing economies growing at least in line with GDP, relatively benign regulation is needed to encourage ongoing investment in utility infrastructure. It is essential that growth in the supply of power, keeps pace with growing demand. This is a key reason why a stock such as the integrated Malaysian electricity company, Tenaga Nasional, has risen 64% this year. Our stance on regulation is that, for the most part, independent regulation reduces rather than increases risks. This view is at odds with the more generally held perception in the market, whic...
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