As emerging markets continue to grow and have insatiable energy demand, there are numerous reasons to watch nuclear energy and the new Global X Uranium ETF (URA).
URA will be the first ETF to give exposure to a global pool of companies which include uranium miners, refiners and equipment makers. Uranium is important because it is a primary component in the production of nuclear energy and is used in nearly 4 percent of the globe’s traditional non-renewable energy.
On the demand side, the largest push is expected to come from increased demand for nuclear energy. According to the Nuclear Energy Agency, the number of nuclear reactors to generate electricity around the world is expected to grow by nearly 133 percent over the next 40 years. Furthermore, nuclear energy’s appeal is expected to increase due to its eco-friendliness. Nuclear energy doesn’t produce carbon dioxide like its fossil fuel competitors. Lastly, nuclear energy is getting political support around the globe, particularly in emerging markets. China, for example, is expected to have as many as 150 new nuclear power reactors become operational over the next 10 years and India plans on doubling the share of nuclear power on its grid to greater than 8% over the next 20 years.
In a nutshell, the demand for uranium is expected to increase as a direct result of its use in the production of nuclear energy and is likely to provide positive price support to URA.
Disclosure: No positions