Increased infrastructure spending in emerging markets

China opened 4,100 kilometres of new railways in 2022 alone. For context, most of the UK’s rail system is managed by Network Rail, which has 15,811 kilometres of rail under management. The UK is home to the oldest rail network in the world, with the London Underground allowing the city to be a continued hive of business activity. However, new technologies and ground-up designs have allowed other countries to catch up. 

Of these 4,100 kilometres of new rail in China, 2,082 kilometres are high-speed railways. While the UK is struggling to complete the high-speed HS2 route, China’s total railway system has now reached a length of 155,000 kilometres. During the 1990s, China’s leadership was impressed by the rail network in Japan and realised there were capacity constraints in the country. This was the start of significant spending to expand the rail network, which has continued with an estimated $103 billion spent on Chinese railway assets in 2022.  

Further afield, Ethiopia completed a railway line from Addis Ababa to the Port of Djibouti. The project was finished in 2016 and cut the 3-day road trip to a 12-hour train journey. The cost was an estimated $3.4 billion with funding provided by the Chinese government. The Port of Djibouti now services as the main import and export channel for the country, and the economy continues to grow at c. 6% YoY. A new trans-national railway line is now being proposed, which will head north from the capital to the port town of Massawa in Eritrea. 

These are only a few examples of large infrastructure projects in emerging markets which require large volumes of people, raw materials, and electricity to complete. This presents a significant opportunity to deploy long-term capital into projects which generally benefit the wider population as well as the environment.