United Technologies executives sounded confident that the global infrastructure build-out was on track. In other words, skyscrapers relying on Otis elevators would keep rising over Chinese cities at a rapid rate.
"The trends that are driving growth in Asia do not look to slow down in the near term," Hayes said, pointing to 17 million people per year in China migrating from farms to factories.
"Urbanization is a powerful force, and it is what has been driving the business really for the last five years," both sales of Otis' elevators, Carrier's air conditioning equipment, and aerospace, where India and China are putting in record aircraft orders. "So, Asia looks to remain solid," he says.
Now some more from Caterpillar (CAT)
- The company said it expects overseas sales to drive solid profit growth this year as well, with the United States teetering on recession.
- "Global markets for mining, energy and infrastructure development are booming," he (CEO) said in a statement.
- "We expect the world's robust investment in infrastructure to continue well into the next decade, and we'll need more capacity to serve our customers," he said.
- Peoria-based Caterpillar's sales by region illustrate just how the weakening American economy affected the company. Revenue from the sale of heavy machinery such as bulldozers dropped 7 percent in North America but rose by 40 percent in Asia and the Pacific and 32 percent in Europe, Africa and the Middle East.
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Takeaway: I have a lot of global infrastructure stocks in the portfolio. Right now with pervasive fears and "baby in the bathwater" thinking these stocks continue to get punished. So while we can be correct in the fundamentals, the "perception" is the growth in these end markets is coming to an abrupt end, and soon. We've discussed how false this is, in the past on the blog, and we can see evidence to the contrary in what the conglomerates are saying as well. [Honeywell (HON) is another that reported strong global growth today]Doesn't mean investors will care right now, but we can see from various sources that the growth is there, and continuing and will for many years. Will there be slowdowns? Of course; some of these countries are growing at unsustainable paces. But they will continue to grow at a pace we could only hope for here. Those with cash, will eventually rule. And these countries are loaded with cash.
Once the market calms down and comes out this other end of 'adjustment' these infrastructure names should see a very good return. But they certainly could remain under pressure for the foreseeable future. But not due to fundamentals... simply perception.
I will say this however; without the global growth story these US companies would be in much worse condition - and the stock market would be far lower. That is the only thing saving the bacon of most of these companies. And again, while this global growth will continue it will surely moderate - which could be an issue in the next 6-24 months.
