Renewable Stocks Drop as Oil's Plunge Spurs Global Selloff

  • Drop in clean energy shares on oil likely temporary: Warburg
  • Investment in clean energy hit a record in 2015, BNEF says

An index of renewable energy stocks fell to the lowest in more than two years as floundering oil prices and a global equity sell off left investors fleeing from risk.

The WilderHill New Energy Global Innovation Index tracking 104 companies closed down 2.3 percent, reaching its lowest level since July 2013. The Dow Jones Industrial Average closed down 1.6 percent. The Standard & Poor’s 500 Index fell 1.2 percent, and oil in New York lost 6.7 percent as investors piled into gold and other safe-haven assets. 

While the drop in solar and wind stocks is not tied directly to falling oil prices, investors generally view renewable energy stocks as risky, according to Pavel Molchanov, a Houston-based analyst at Raymond James Financial Inc.

“It’s not that anything has changed in the solar industry in the last two weeks,” Molchanov said in an interview. “But sentiment about anything that is remotely higher beta, higher risk, is about as ugly as it’s been since the financial crisis.”

Gloomy Sentiment

SunEdison Inc., the world’s biggest renewable energy developer, closed down 5.3 in New York, continuing a months-long slide that has driven shares down 87 percent in the past 12 months. Canadian Solar Inc., the world’s third-largest solar manufacturer, fell 3.4 percent while Intelligent Energy Holdings Plc., a global power technology company based in Loughborough, U.K., closed 16 percent lower.

Renewable energy shares “are being caught in the tailwind of gloomy, bearish sentiment that’s pulling down stocks everywhere,” Arash Zamir, a renewable energy analyst at M.M. Warburg & Co., said in a telephone interview Wednesday. “There’s no automatic immunity, but there’s no reason to assume the drop will be sustained for renewable energy.”

Clean energy investment rose 4 percent to a record $329 billion last year despite the drop in oil prices, according to research from Bloomberg New Energy Finance released last week. The WilderHill index is down 16 percent this year. 

“Fundamentally, oil prices should not impact clean technology shares in a sustained way,” Zamir said.

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