When I coined the term "global synchronic growth" a few years back, I must have had ABB Ltd. (ADR: ABB) in mind. Global synchronic growth is the simultaneous expansion of most of the major economic zones around the world, which spurs investment and creates vast amounts of wealth. Up until now, this development has been largely a consequence of the pro-growth policies adopted by the "Group of Eight," or G8, countries, as well as accelerating growth in the increasingly important "BRIC" economies of Brazil, Russia, India and China.
Going forward, however, investors can expect an additional boost from a $40 trillion global infrastructure boom. And one of the biggest beneficiaries from this massive surge in infrastructure outlays will be Zurich-based ABB, a leading global provider of electrical-system services and components.
With a market value of roughly $63 billion, ABB is the world’s leading builder of power networks, making it one of the real heavyweights in a sector that includes such rivals as America’s General Electric Co. (GE) and Germany’s Siemens AG (ADR: SI). ABB is truly global in focus. Over the last several months, for example, ABB has announced deals of $233 million in Korea, $74 million in India, $170 million in the Sweden-Finland region, $53 million in Dubai, and $70 million in China, just to name a few.
Infrastructure modernization is one area of economic development in which no country with global-growth aspirations can afford to lag. And that’s especially true when it comes to power generation, where the consequences of neglect can be huge. Research demonstrates an almost perfect correlation between electricity-demand growth and economic growth. In recent years, we’ve seen blackouts from Barcelona to Johannesburg, with measurable fallout each time.
BRIC economies such as China and India, which are expanding at rates of 9%-10% annually, are consuming massive amounts of additional power to make that happen. Energy is in the headlines every day, with crude oil establishing new record highs virtually every day.
