5 minute read

Global energy consumption is on the rise, driven by economic expansion, urbanisation, population growth, and the rise of power-intensive technologies like AI and data centres. Going hand-in-hand with this trend is a surge in investments across the energy sector.

The gap widens between clean energy and fossil fuels

Global energy investment is set to exceed $3 trillion for the first time ever in 2024, according to a new report by the International Energy Agency (IEA).

The IEA projects that $2 trillion of that staggering total will fund clean technologies like renewables, new energy grids, efficiency improvements, and low-emissions fuels. The remaining $1 trillion will go to coal, gas, and oil.

That means, for the first time ever, investments in clean energy will be double the amount going to fossil fuels. Leading the charge is solar power, with investment set to reach $500 billion this year – more than all other electricity generation technologies combined.

The surge in clean energy spending is happening even as today’s higher borrowing rates add to project costs, with those added expenses being partially offset by easing supply chain pressures and falling prices.

Solar panel costs, for example, have fallen 30% over the past two years, and prices for the materials that are crucial for the energy transition have also dropped sharply, especially metals required for batteries, like lithium.

As an investor, what does this mean for me?

The energy landscape is shifting, with the IEA calling for even more investment to limit the rise in global temperatures. For long-term investors, that’s as compelling an opportunity as any.

If you’re looking to invest in the shift to clean energy, our Thematic portfolios offer a way to gain diversified exposure to clean energy and other transformative technologies. Our Environment and Cleantech portfolio, in particular, invests in companies focused on renewable energy, energy efficiency, and other sustainable technologies.

📰 In Other News: The US dollar stays strong

The US dollar is steadying itself at an eight-week high, buoyed by strong business activity and easing inflation in June. The US dollar index (our Simply Finance breaks this down) is now hovering around the 105 level.

Meanwhile, the yen seesawed around 160 per dollar, with Japanese authorities signalling possible intervention. The yen's 1.4% fall in June – and over 10% drop against the dollar this year – has been exacerbated by the Bank of Japan delaying stimulus reduction and domestic policy debates over interest rate hikes.

The focus remains on upcoming US inflation data, which could influence future interest rate decisions. Economists predict a slowdown in the annual growth of the personal consumption expenditures (PCE) price index to 2.6% for May. A softer reading could strengthen bets on a rate cut by September, with the futures market now pricing in a 60% chance of this scenario.

These articles were written in collaboration with Finimize.

🎓 Simply Finance: Currency index

A currency index measures how strong or weak a particular currency is compared to other major world currencies. A currency index compares the value of one currency (like the US dollar) against a "basket", or group, of other major currencies (like the euro, yen, and pound).

If the index goes up, it means that the currency is getting stronger – you can buy more foreign currency with it – and vice versa. It's a quick way to get a sense of how a currency is doing on the global stage without having to look at individual exchange rates for multiple countries.

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🗓️ Save the Date

Join Stephanie and Michele on 9 July for our Market Outlook webinar. Discover key market trends, strategic portfolio adjustments, and investment opportunities for the second half of 2024. 

Don’t miss this chance to gain expert insights and position your investments for success.

What we'll uncover:

• Market trend analysis
• Implications of the economic regime shift
• Portfolio strategies for a high-interest-rate environment
• Emerging investment opportunities

Join us for an inspiring evening on Thursday, 4 July, as we partner with Women in ETFs Malaysia and female industry leaders to share insights and practical tips to empower women in their financial and personal journeys.

In the event, you’ll discover:

• Strategies for breaking barriers in the corporate world.
• Expert tips on balancing entrepreneurial financial management and personal well-being.
• Diverse perspectives from accomplished industry leaders.

Don’t miss this chance to connect and learn with influential women across various industries. Enjoy meaningful discussions over dinner with a community of ambitious women.

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