Water on the stock market – a raw material worth paying attention to

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Water on the stock market and investing in the water sector is a little-known topic in our country. Climate change and the water crisis are phrases that are increasingly common in the public space, but sporadically in the context of the market value of water. Translating these phenomena into the language of economists, we can say: the supply of water is decreasing, while the demand for water is steadily increasing. This, in turn, leads to the simple conclusion that the price of the resource and the market value of entities closely related to it will also gradually increase. So the way is opening up for investors in the water market, and beyond, seeking the economic returns associated with owning, distributing and managing the asset. Water on the stock market is no longer a surprise, and is becoming an increasingly desirable commodity.

Water – the basis for life and development

H2O– this simple chemical compound is one of the key to ensuring life on our planet. It is this water that drives the development of national economies with their most important sectors, namely industry, energy and agriculture, which together account for approx. 90%. consumption of total freshwater resources. Other approx. 10 percent. falls on households and their daily needs. Expert forecasts predict that in 2050. Global water demand will increase by 55 percent.

Earth’s climate change poses another challenge to water availability. The fact of the matter is the ever-increasing global average temperature on our planet. This is not without an impact on hydrological relations, water levels and the number of rain-free periods in the area. Along with climate change also come extreme weather events, including droughts and floods, which significantly affect the quantity and quality of water available to people and the economy.

Water on the stock market – beginnings in the economic arena

Water is increasingly important in economic terms. As early as the 18th century, one of the fathers of economics, Adam Smith, considered the question of its real value. He noted an interesting paradox: water – although essential for human life – is considered a good with no economic value, while diamonds, which are unnecessary for survival, have great value. With socio-economic development, modern views on water and its real value began to take shape.

In 1992. The concept of water as an economic good was developed. The conclusions were published in the form of the “Dublin Statement on Water and Sustainable Development.” According to the provisions of the Dublin Declaration, water is a good with a certain economic value, which should be distributed in an integrated manner, in accordance with the principles of the market economy. This was the first step to take the position that water currently has on the stock market. At the same time, it was stressed that it is a basic raw material and an essential ingredient for life, so its price should be attainable for every person.

Regulation of water access and price is of great importance for the water market and at the same time affects the economy of a region. The interest and actions of large corporations and private investors can be controversial and generate public disputes. These concerns are most often related to regulations on water ownership and limiting its availability to end users, who depend on prices dictated by the operators themselves, i.e. the water companies.

Water on the stock market – a dynamic global market

Water on the stock market is getting more and more attention and appreciation. The global water market is trending upward year after year. Its value as of 2023, according to Global Water Intelligence, is about $915 billion. In turn, specialists’ forecasts for the next 5 years show a stable growth trend of an average of 7% per year until 2028. The most developed and most numerous water market is the US – this is where the largest and richest companies are located.

On the Wall Street stock exchange, the market capitalization of the largest Blue Market conglomerate, American Water Works, is $26.5 billion, and year-on-year operating income rose more than 28 percent. Companies such as Danaher Corporation, Watts Water Technologies, AQUA America, Pentair, York Water Company, American States Water Company and Xylem Inc. are global market giants and have a direct impact on many sectors in other countries around the world. On the US stock market, in addition to water companies, in 2008. Water made its debut as a stock market commodity in the form of the NQH2O index.

Currently, the price of the NasdaqVeles California Water Index is approx. 181 dollars per share, and its price in August this year. rose by 10.3 points. ETFs linked most often to water companies from the U.S., Canada and Europe are also an attractive option for exchange traders.

The largest and most stable among them are the iShares Global Water Index ETF, the Guggenheim S&P Global Water ETF and the AllianzGI Global Water Fund. Their portfolio includes dozens of entities in the water industry that show stable growth in market value, and this is the best incentive for investors.

The largest in the world is the Asia-Pacific water market. Experts predict that it also has the greatest potential for growth in the years to come, and the rapid year-on-year increases of specific players in this industry seem to confirm these predictions. Countries such as China, India and Japan place particular emphasis on technological development and innovation in the water industry, especially in the area of wastewater treatment. This is due to adverse weather events, including floods, which haunt the entire region and effectively hinder the economic development of individual countries.

In this part of the world, specialized water supply companies, such as China’s Beijing Enterprises Water Group (BEWG), which is valued at nearly $12 billion, are attracting the attention of potential investors. Notable technology players from the region include Japan’s Kurita Water Industries, FujiClean and Tokyo Water Co; China’s Nongfu Spring, Micron Pure Water Solution and Fresh Water Group; India’s Qua, Tata and Rail Neer and Patanjali; and from the Australian continent: Sydney Water Australia and Hunter Water. Undeniably, water on the stock market is doing better and better.

In Europe, on the other hand, the biggest technology players in the water market on the stock exchange are already giant corporations: Veolia Environment, Severn Trent, Nestle Water or Remondis. Veolia Environnement only in the first half of 2023. generated revenue of about 22.7 billion euros, an increase of 14 percent. year-on-year.

Poland against the background of Europe and the world

We currently have only a few water infrastructure companies and bottled water producers on the Polish Stock Exchange. In the industry of Polish technology entities, there are currently no leading companies representing the sector on the stock exchange. However, expert forecasts indicate that this trend will change in the near future, and the industry itself will be one of the more attractive investment sectors and water on the Polish stock exchange will rank high.

Looking at the financial results of the largest players representing the Blue Market, it can be expected that the water market will continue to grow in the coming years. New companies will be created to develop and implement innovative technologies and inventions in response to the needs of a changing world.

Water on the stock market – the growth of the Blue Market sector

There will be new corporations and financial instruments related to water distribution and management on the exchanges, which will maximize profits and thus drive the development of the entire Blue Market sector. And climate change will further affect people’s awareness of the real value of water as an essential good for life and economic development.

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