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China’s Solar Stocks Are Surging After Xi’s 2060 Carbon Pledge

China’s Solar Stocks Are Surging After Xi’s 2060 Carbon Pledge

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China’s massive renewable energy industry has seen shares soar since President Xi Jinping announced the country aims to go carbon neutral by 2060.

That surge is set to be supercharged Friday by mainland-listed solar giants like Longi Green Energy Technology Co. and Tongwei Co., which will be trading for the first time after a week-long holiday during which some peers in Hong Kong posted gains of more than 20%.

China’s Solar Stocks Are Surging After Xi’s 2060 Carbon Pledge

The furious rally illustrates the growth potential investors see in Beijing’s effort to go from the world’s biggest polluter to carbon neutrality. The shift could require anywhere from $5 trillion to $15 trillion in investment, much of it in wind- and solar-power generation.
The premium that mainland stocks, known as A-shares, normally have over Hong Kong counterparts has narrowed during the trading holiday, said Dennis Ip, an analyst with Daiwa Capital Markets. “So it’s very likely that A-shares of solar companies are going to have very good performances” on Friday.

China is home to the most solar panels and wind turbines in the world, and is also the leading manufacturer of both. Its companies are technology leaders in photovoltaic panels, which are seen as the leading source of future power, according to BloombergNEF.

Government officials are already considering proposals to accelerate adoption of clean energy, which would boost installations of solar and wind, in its next five-year plan, which begins in 2021.

Here is how some key companies have fared since Xi’s announcement, made in a Sept. 22 speech to the United Nations:

  • GCL-Poly Energy Holdings Ltd., one of the world’s biggest producers of polysilicon, the key material for solar panels, has jumped 54% in Hong Kong
  • Xinyi Solar Holdings Ltd., which produces specialized glass that covers panels, is up 51%
  • Xinjiang Goldwind Science & Technology Co., the country’s leading wind-turbine manufacturer, has climbed 17% in Hong Kong​​
  • China Longyuan Power Group Corp., the biggest publicly traded wind-farm operator in China, is up 23%
  • Daqo New Energy Corp., a polysilicon maker based in China and traded in New York, has surged 67% based on Sept. 21 close

Stocks to watch Friday when mainland trading resumes include:

  • Longi, which makes wafers, cells and panels and is the world’s largest solar company by market capitalization
  • Tongwei, a major producer of polysilicon and solar cells
  • Sungrow Power Supply Co., which makes inverters for solar panels

Longi and Tongwei will be able to move as much as 10% from their Sept. 30 finishes on Friday while Sungrow’s trading limit is 20%. The trio’s stocks have risen from 5% to 10% since Xi’s announcement.

Source: Bloomberg L.P.
Anand Gupta Editor - EQ Int'l Media Network