Covid-19 is 'bump in the road' for sustainable energy sector

Cyclical and structural opportunities

Jonathan Waghorn of Guinness Asset Management

Jonathan Waghorn of Guinness Asset Management

The energy sector is the weakest performing MSCI sub-sector this year, down 40%.

The MSCI World Energy Index is dominated by oil and natural gas companies and the performance reflects the dramatic impact of Covid-19 lockdowns on global transportation and manufacturing, bringing oil demand down about 25% in April. Add in an oil supply surge from Saudi Arabia (after the failed March OPEC meeting) and it is not surprising that the oil-oriented index has been so weak. However, the index is a partial representation of the broader global energy theme. While oil represents around one-third of world energy demand, it is worth remembering that coal still represents 27%,...

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