May 19, 2021
News ways of accessing space could spell future opportunity, says BNY Mellon investment strategist George Saffaye
A new Space Age has begun. According to trade publication Spaceflight Now, the 114 launch attempts last year tied 2018 for the most orbital launches globally since 1990, when Cold War-era military budgets helped propel more missions into orbit.
For BNY Mellon global investment strategist George Saffaye, this increased launch cadence makes for interesting viewing from an investment perspective.
“We expect the space economy to grow at between 6-8% or higher in the next decade driven by rapidly falling launch costs, especially as we move toward the commercialization of space, where private/public companies become far more involved,” he says. “Growing demand will provide a platform for reusable rocket developers to continue to improve their products, further lowering costs.”
In time, he says, cheaper access to space should enable other ventures to flourish. Indeed, some estimates show the global space industry could generate revenue of more than US$1 trillion or more in 2040, up from US$350bn, currently.1 “Over the next several years, we believe investments will expand beyond national defense and providing satellite-based internet access to unserved populations and geographies,” he comments.
So which areas could be ripe for investment? According to Saffaye, there are three main hubs for commercial innovation: Launch technology, tourism and hypersonics.
Launch technology: Up and away
As technology becomes more ubiquitous, says Saffaye, our reliance on satellites will only continue to grow, as we leverage these systems for everything from agriculture, to internet access, to supply chain data, as well as environmental monitoring and considerably more.
Meanwhile, the reduced costs of satellites themselves – as well as falling launch costs means more and more companies will consider creating their own satellite networks and constellations. “Launching and maintaining satellites and their networks is only part of the opportunity,” explains Saffaye. “We expect to see growing opportunity in the burgeoning support ecosystem from supplies of materials and equipment, to space-based data and analytics.”
Holidays in the sun
Space tourism is another potential area of opportunity, according to Saffaye. This could center on orbital, suborbital and lunar space tourism. To date, only Russia has offered this kind of service – to the International Space Station (ISS), at a cost of US$20-$25m per cosmonaut – but this practice ended in 2010 due to the requirement for larger crews on the ISS and the need for bigger expedition crews overall.
Today, sub-orbital trips are the focus of several companies, some with their plans now well advanced. Costs could reach upwards of US$200,000 per passenger and year-long waiting times are expected once the first flights take place.
Faster than a speeding bullet
The final area of innovation highlighted by Saffaye is hypersonics. Here, the design of new aircraft could see the resurrection of hypersonic flight on a regular commercial basis. “While much of that ended when the Concorde retired over a decade ago, we have now advanced the technologies from design to build and have also overcome key issues such as sonic booms,” he says. “That means the runway is clear for hypersonic flight to further transform travel as flight times are drastically reduced and time-utilization greatly enhanced.”
1 Morgan Stanley: ‘Space: Investing in the Final Frontier’, 24 July 2020
All investments involve some level of risk, including loss of principal. Certain investments have specific or unique risks. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.
Recent market risks include pandemic risks related to COVID-19. The effects of COVID-19 have contributed to increased volatility in global markets and will likely affect certain countries, companies, industries and market sectors more dramatically than others.
This material has been provided for informational purposes only and should not be construed as investment advice or a recommendation of any particular investment product, strategy, investment manager or account arrangement, and should not serve as a primary basis for investment decisions. Prospective investors should consult a legal, tax or financial professional in order to determine whether any investment product, strategy or service is appropriate for their particular circumstances. Views expressed are those of the author stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change. This information contains projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or expectations will be achieved, and actual results may be significantly different from that shown here. The information is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be and should not be interpreted as recommendations. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
BNY Mellon Investment Management is one of the world’s leading investment management organizations, encompassing BNY Mellon’s affiliated investment management firms and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the corporation as a whole or its various subsidiaries generally.
No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
© 2021 BNY Mellon Securities Corporation, distributor, 240 Greenwich Street, 9th Floor, New York NY, 10286
Not FDIC-Insured | No Bank Guarantee | May Lose Value