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

Cyclical and structural opportunities

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%,...