Stock Update

Evoqua Water Technologies has been added to
Evoqua Water, a wastewater treatment company has been added to The US-based corporation was founded more than 100 years ago and became a stock company in November 2017.

Why US Water Utilities are falling
US water utility stocks have been falling for some weeks even though the Dow Jones and S&P 500 look relatively steady. One reason for the decline are rising US interest rates. Utilities in general are often highly indebted and with rising interest rates borrowing money or rolling expiring credits just becomes more expense what eventually depress the profit. Take a look at Aqua America and American Water Works. Both have promised to grow steadily in the coming years by new acquisitions. However, acquisitions precede incurring new debts. Nonetheless, the U.S. government has signaled that it could imagine selling water management to private companies. The big US water utilities will definitely use this long term chance. Another reason is how utilities are perceived by the market. Utilities, in this case especially water utilities, are often seen as bond proxies. Now, with rising interest, conservative income investors can rather pick up bonds instead of utilities since the yield both securities offer are almost the same. A 10-year-US bond even offers a higher yield than some US water utilities' dividend yield.

Water Loss of big Water Utilities
The water loss of water utilities all around the world is partly enormous. Water loss due to leakages and ailing water infrastructure pipes depresses the profit of water utilities and is reason to act. Sabesp, the Brazilian water supplier, had a measured water loss of 30.7 % in 2017! The water loss for United Utilities in 2017 was 439.2 Ml/d. Golden State Water Company (a subsidiary of American States Water Company) has a water loss of round about 7%. Considering this, water infrastructure companies as well as companies which have specialized in leak detection might benefit from huge investments from water utilities to fix their infrastructure systems in order to reduce water loss.

As a UK Water Investor, keep an Eye on Labour Party
If you are invested in the UK water utilities like Pennon, United Utilities or Severn Trent, monitor the popularity of the Labour Party. Jeremy Corbyn, still leader of the opposition Labour Party, has pledged to renationalise the water companies. This would lead to a delisting of the UK water companies and is one crucial reason why these stocks have declined in the last month. Either way, the regulations for UK water companies will be toughened by Ofwat, the Water Services Regulation Authority, leading to lower profitability.

Trump’s infrastructure proposals
Even though Trump’s infrastructure proposal is unlikely to happen until after November’s midterm elections, it has huge potential for water infrastructure companies in the United States. A certain amount of the $1.5 trillion will be invested in the water infrastructure systems and pipes leading to great oppurtunities for companies like American Water Works, Northwest Pipe Company and Xylem.

Hydrotec files for Insolvency
Hydrotec, the water technology company from Germany, has filed for opening of insolvency proceedings. Thereby, the business is intended to be continued.