China's Sky Solar Soars After Signing $100 Million Funding Pact

  • Company signs deal to tap into Latin America, Japan, the U.S.
  • Investors have been whipsawed by volatility in solar stocks

Sky Solar Holdings Ltd. rose to a one-month high in New York after it signed an agreement for new projects worth as much as $100 million with Hudson Clean Energy Partners.

The American depositary receipts rose 15 percent to $7.05 on Monday, extending their advance from a record low last month to 41 percent. The Hong Kong-based developer of solar projects will work with Hudson Clean Energy, a private equity firm focused on renewables, to fund ventures in Latin America and Japan, while collaborating on expansion in the U.S., the two companies said in a statement. Yingli Green Energy Holding Co. jumped 16 percent to 50 cents.

Investors have been whipsawed by price swings in Chinese solar stocks as they look for signs that an industry-wide slump brought on by a global glut may be easing. China, the world’s biggest carbon emitter, said on Friday that the country will probably bring 10 gigawatts of solar into operation annually, without specifying time frame. Solar installations surged 10-fold to about 33 gigawatts in the three years through 2014, according to data compiled by Bloomberg.

Positive Developments

“Overall, China solar development remains very positive and the Chinese government has been very involved and supportive in the solar market,” Angelo Zino, an equity analyst at S&P Capital IQ, said by phone from New York. “Unfortunately the volatility in this industry doesn’t look like it’s going away any time soon. The skepticism going on China is more on the macro economy, lending and demand environment from consumers.”

Sky Solar’s 30-day historical volatility is at the highest since February after the shares tumbled as much as 60 percent this year before rebounding. Yingli, which was the biggest solar panel maker until last year, has swung between gains and losses in the past weeks after the Baoding-based company first cut its outlook for shipments and then announced it won the biggest ever solar panel supply agreement in China.

Trina Solar Ltd., China’s third-biggest panel maker, added 2.1 percent to $9.24, while JinkoSolar Holdings Co. increased 3.8 percent to $22.73 on Monday. The Bloomberg gauge of the most-traded Chinese companies in the U.S. slipped 0.6 percent, led by a third consecutive loss in Alibaba Group Holding Ltd.

Economic momentum remains weak in China as a preliminary Chinese manufacturing report on Wednesday will likely show a contraction, according to economists surveyed by Bloomberg.

The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF rose 4.3 percent to $32.97. The exchange-traded fund it posted a second weekly outflow in the five days ended Sept. 18 as traders pulled $71 million.

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