Monthly report – November 2024

Monthly fund update

Key points

• The key factor influencing energy markets in November was the US election.
• Negative sentiment in the majority of the electric energy sector was likely related to the perception that renewables are under pressure and the future of electricity will be all nuclear and gas-fired (Donald Trump’s “drill, baby, drill” comments). Our research indicates that an ‘all nuclear and gas’ scenario is implausible.
• The US has increasing demand for electricity for the first time in 20 years (driven by data centres) and needs new electricity generation capacity very quickly.
• We have a very optimistic outlook for electricity demand and all electricity generation technologies, their supply chains and associated infrastructure. We have upgraded our outlook for electricity demand growth following Trump’s election victory and the Republican sweep.
• The wall-to-wall coverage of the election overshadowed everything else, including a US interest rate cut. Falling interest rates are yet to have a material impact on our focus area of the electric energy sector and its supply chains (which have historically displayed very high sensitivity to interest rates). We believe that this lag will prove temporary.