Solar Outlook Boosts N.Y. Index to 4-Month High: China Overnight
Solar stocks drove Chinese companies traded in the U.S. to a four-month high, after panel manufacturers said the country may double installations this year as the government pushes to consolidate the industry.
The Bloomberg China-US 55 Index of the most-traded Chinese equities in the U.S. gained 1.4 percent to 103.99 at 3:08 p.m. in New York, poised for the highest close since Sept. 15. Trina Solar Ltd. (TSL) led gainers, adding the most since Jan. 12, while LDK Solar Co. (LDK) and Suntech Power Holdings Co. (STP) both advanced more than 4 percent. Renren Inc. led a surge in Internet companies on a report that Facebook Inc. may issue shares next week.
Chief executive officers of of Suntech and Trina, China’s largest and fifth-biggest solar panel makers, said the country may install as much as 5 gigawatts of panels in 2012, from about 2.2 gigawatts installed last year. Companies with the best technology and brands will win out in the streamlining of the industry, Trina CEO Jifan Gao said in an interview from the World Economic Forum meeting in Davos, Switzerland.
“China holds the key to the fate of the industry from a standpoint of creating demand,” Hari Chandra Polavarapu, an analyst who covers the Chinese solar industry at Auriga USA LLC in New York, said in an interview yesterday. “The optimism is there.”
The nation may add at least four gigawatts of panels, Suntech’s CEO Zhengrong Shi said separately on Jan. 25. Bloomberg New Energy Finance predicts China will add 3 gigawatts this year as global solar demand ranges from 25.5 gigawatts to 32.8 gigawatts.
China is increasing solar installations on concern that demand may fall in Europe as countries cut subsidies to reduce government spending amid the debt crisis. In Germany, the world’s largest solar market, lawmakers proposed cutting subsidies but failed to reach an agreement to do so at a Jan. 25 meeting. Spain said yesterday that it is halting subsidies for new renewable energy projects in order to trim the country’s deficit.
“This extra demand from China, from an overall industry standpoint, I think it still leaves the world in a relatively flat demand situation,” said Daniel Ries, an analyst at Collins Stewart LLC. “I don’t see the rationale to have someone going long these stocks.”
American depositary receipts of Jiangsu, China-based Suntech climbed 3.1 percent to $3.34, rising the most since Jan. 18. Changzhou-based Trina jumped 5.9 percent to $8.56, headed for its strongest close since Jan. 18. LDK Solar, China’s second-largest solar-panel maker, advanced 5.2 percent to $4.89, the biggest jump since Jan. 11, based on closing prices.
7 Days Advances
The Standard & Poor’s 500 Index retreated 0.2 percent after a report showed that the world’s largest economy expanded less than forecast in the fourth quarter. U.S. gross domestic product grew 2.8 percent, trailing the median estimate for 3 percent growth in a Bloomberg survey of analysts.
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., rose 1 percent to $39.56.
Guangzhou, China-based budget-hotel operator 7 Days Group Holdings Ltd. advanced 6.2 percent to $14.93 as investors bet that domestic demand will boost the sector even as a slowing global economy deters tourists. Home Inns & Hotels Management Inc., China’s largest operator of budget hotels based in Shanghai, jumped 3.5 percent $30.92.
“The consumer service sector seems to be pretty resilient,” said Adam Krejcik, an analyst at Roth Capital Partners in Newport Beach, California that rates 7 Days a “buy.” “We’ve become increasingly bullish on a lot of the names after a pretty dramatic pullback last year. We tend to believe that the worst is behind.”
The Hang Seng China Enterprises Index (HSCEI) rose 2.7 percent in the two trading days it was open this week. Mainland Chinese markets were closed for all five days for the Lunar New Year holiday.
Chinese manufacturing contracted in January for the second time in three months, according to the median estimate of nine analysts surveyed by Bloomberg before the purchasing managers’ index’s release on Feb. 1.
Renren, which runs a social networking site, surged as much as 20 percent after the Wall Street Journal reported that Facebook, the largest of the sites in the world, may file for an initial public offering on Feb. 1, citing unidentified people.
Shares in Beijing-based Renren rose 17 percent to $4.88, while Sina Corp. (SINA), which operates a service similar to Twitter, jumped 11 percent to $69.14.
Facebook may be valued at $75 billion to $100 billion in an IPO, the Journal reported. A Facebook share issue may increase investors’ willingness to invest in Chinese companies that offer similar services, said Echo He, an analyst at Maxim Group LLC in New York.
“It just confirms that a lot of investors are interested in this type of company,” He said. “People don’t want to be late.”
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