On June 17th, Allianz Investment stated in a post that despite the average economic growth, weak Purchasing Managers' Indices, and a seemingly delayed strong recovery in China, several European industrial leaders continue to grow in the challenging environment of 2024. In this situation, structural trends are alleviating cyclical headwinds, and in some cases even overcompensating for the impact of these challenges. The bank believes that three factors - electrification, data centers, and the digital industry - will support the prospects of these European industrial leaders. The bank also mentioned that this year's Hanover Industrial Fair will focus on several industry trends that strongly support these driving factors. Electrification. Ambitious decarbonization commitments mean the world needs new ways to quickly improve energy structures. The International Energy Agency estimates that electricity currently accounts for around 20% of energy consumption. Different scenarios may arise (including announced policy scenarios, announced commitment scenarios, and achieving net zero emissions by 2050), but all scenarios see fossil fuels being largely replaced by electricity - in the most ambitious scenario of achieving net zero emissions by 2050, the International Energy Agency predicts an 8% increase in this ratio by 2030. Regardless of which scenario ultimately plays out, there will continue to be ambitious commitments from countries and companies, meaning the demand for electricity as a clean energy source will rapidly increase. At the same time, the proportion of renewable energy sources in the electricity mix will also increase rapidly - the International Energy Agency estimates that global renewable electricity capacity additions in 2023 have risen to 500 gigawatts annually (two-thirds of which is solar). On one hand, energy sources are becoming more unstable, and on the other hand, as demand for electricity (e.g. data centers, smart industries, and smart homes) increases, new electricity infrastructure will require significant investment, with several European companies leading in providing the latest solutions in this field. Data centers. Cloud-based services and artificial intelligence (AI) are driving the growth of data centers, with electricity demand for these facilities in the United States expected to double by 2030. French digital automation and energy management solution provider Schneider Electric estimates that electricity consumption for data centers with AI workloads will grow from 4.5 gigawatts in 2023 to 14-19 gigawatts by 2028, with a compound annual growth rate of 25% to 33%. Data centers are looking to achieve a higher proportion of green energy and are signing long-term agreements with suppliers and energy management companies, creating opportunities in this field. In fact, data centers with high AI workloads require different designs where air cooling is not suitable, creating opportunities for several European industry leaders who offer liquid-cooled AI training servers and related support technologies, including power control and data center infrastructure management software. Digital industry. As the boundaries between industrial and software companies become increasingly blurred, European industrial companies are in a strong position, especially in product design and production technology, demonstrating higher efficiency. The rise of Product Lifecycle Management (PLM) software and system providers shows a strong growth trend, significantly shortening product development processes. Apart from some emerging companies, enterprises with decades of experience are also very active in this field. For example, Siemens claims to be a global market leader in connecting innovative software with factories. The company has a large market share in China, with one in three industrial machines worldwide using its controllers. Although this is a rapidly growing industry, their high market share indicates their expertise in this field. Bright future. Many European industrial companies not only compete with their American counterparts, but in some categories, individual suppliers achieve double-digit sales growth rates, such as Schneider Electric and Siemens. In fact, in some categories, the mid-term prospects for European industrial companies are strong, and investors should focus on suppliers driving energy transition and the next generation of AI and industrial automation. As mentioned earlier, this year's Hanover Industrial Fair will focus on multiple trends highly relevant to these companies, including artificial intelligence and machine learning, industrial energy, and "Industry 4.0". This focus demonstrates the increasing importance of European industrial leaders in the overall economy.