Global Drought Brings New Threats and Opportunities for Investors

Dubai, United Arab Emirates, 4 June 2020, (AETOSWire): According to PROFEL, extreme drought in 2018 caused vegetable processors the most serious problems in the last 40 years.

We can already see some negative impacts of the climate change, like low harvests due to drought, sudden hailstorms, extensive fires, floods, Atlantic coast erosion and other changes.

According to Gulf Brokers survey, investors are already preparing for these changes. They begin to invest into new, up until now rather “less” attractive segments, which may become key players in the capital markets in the future like Apple, Tesla or Amazon.

Water ETFs, such as Invesco Water Resources ETF, ranked among the most interesting investment. Its annual output was 0.55% even after March drop. Furthermore, Invesco S&P Global Water Index ETF had annual output of 0.25% and First Trust ISE Water Index Fund reported annual evaluation of 0.99% (based on data from 11th May 2020). Startups focusing on water shortage solutions may be the right opportunity.

Solar power stations

Solar panels on rooftops are becoming more common globally. The reason is simple; they save household costs for water heating, electricity and environment. Few years ago, Elon Musk introduced his proposals on solar rooftops, and later suggested that solar power stations could supply the whole territory of the U. S.

Canadian Solar Inc., SunPower Corp., and JinkoSolar Holding Co. Ltd. are the world‘s leading providers of photovoltaic and intelligent energy solutions. All these companies appeared in negative numbers in March, yet had showed significant valorization before the pandemic. Future development and a change in perception of the attractiveness of each company could lead to stock growth.

Problematic segments

On the contrary, if the situation worsens, farmers may face problems, and in particular producers of corn, rice, soy and barley, a commodity used for beer production. Similarly, producers of agricultural products would be impacted. Any shortage may cause problems to producers as well as customers, as low offer is likely to cause price growth. Moreover, insurance companies would have to deal with losses of agricultural holdings.

Also, as Gulf Brokers points out, producers of electricity from hydropower plants represent another “endangered” group in case they wouldn’t adapt to the current situation and possible future problems.

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