Record heatwaves in Europe and Asia this summer are leading fund managers to buy...
NEW YORK - Record heatwaves in Europe and Asia this summer are leading fund managers to buy shares of air conditioning manufacturers, betting that the public health risks of rising temperatures will compel businesses and apartment building owners to install cooling systems.
Shares of Johnson Controls International Plc, United Technologies Corp, and Ingersoll-Rand Plc, are all up 25% or more since the start of the year, well above the 19% gain in the U.S. benchmark S&P 500 index. Those gains come despite concerns about slowing global economic growth due to the lingering trade war between the United States and China that have weighed on the industrial sector.
Europe will likely be a large growth market despite the outsized costs of retrofitting older buildings with new cooling systems, said Nicholas Heymann, co-group head – global industrial infrastructure at William Blair. Currently, only about 20% of European households have air conditioning, compared with 87% percent of U.S. households and 90% in Japan, due in part to greater emphasis on less energy-intensive forms of cooling in Europe.
That market would likely be particularly lucrative for Johnson Controls International, where cooling systems make up approximately 50 percent of its revenues and it has a lead in so-called mini-split systems, which do not require expensive ducts to send cool air through buildings, Heymann said.
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