Solar Stocks Hit Five-Month High on Demand: China Overnight
Chinese solar companies surged to the highest level in at least five months, led by Yingli Green Energy Holding Co. (YGE) and Trina Solar Ltd. (TSL), after Deutsche Bank AG said major Asian manufacturers are running at full capacity.
Yingli jumped 20 percent, the most since March 2009, leading an advance in the Bloomberg China-US 55 Index of the most-traded Chinese shares in the U.S., which climbed 0.2 percent to 106.29 yesterday in New York. Trina, the nation’s fifth-largest solar-panel supplier, jumped 19 percent, extending a two-day gain to 34 percent. Focus Media Holding Ltd. climbed 3.3 percent after dropping as much as 5.4 percent as short-selling firm Muddy Waters issued its fifth report since November questioning financials of the digital adverting company.
China’s government aims to double solar installations this year and has set preferential power tariffs designed to encourage manufacturers and developers to move into cleaner energy sources. The U.K. Energy Minister Greg Barker said yesterday in London he’s targeting solar capacity of 22 gigawatts in the nation by 2020, more than 20 times the current level.
“Demand pick-up in multiple markets appears to be the primary driver of recent strength in fundamentals,” Vishal Shah, an analyst at Deutsche Bank, wrote in a report yesterday. “Tier-one companies in China, Taiwan and Korea have rising orders and are running at 100 percent of utilization.”
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., fell 0.8 percent to $40.09 after jumping 1.7 percent a day earlier, the most in three weeks.
Inflation (CNCPIYOY) unexpectedly accelerated in January, rising to 4.5 percent from a year earlier, China’s National Bureau of Statistics said yesterday. That was more than all 33 forecasts in a Bloomberg News survey of economists and higher than an increase of 4.1 percent in December.
American depositary receipts of Yingli, based in Baoding in northern China, surged 20 percent to $5.90, the highest since Sept. 1. Trina’s ADRs jumped to $10.95, the highest since Sept. 8. Suntech Power Holdings Co., the world’s largest solar-panel maker, rose 9 percent to $4.18, also a five-month high. LDK Solar Co., based in Xinyu of Jiangxi province, advanced 13 percent to $6.70.
Oversupply in the global solar industry is showing signs of abating with demand expected to shift from Europe to Asian and U.S. markets, Renewable Energy Corp. ASA (REC), a Sandvika, Norway-based maker of polysilicon, which is the main raw material for solar modules, said in its earnings presentation Feb. 8.
China plans to develop three gigawatts of solar capacity this year, double its existing capacity, the National Energy Administration said on its website on Jan. 11. Installations in China may reach four gigawatts this year, Zhenrong Shi, Suntech’s chief executive officer, said in a Bloomberg TV interview in Davos on Jan. 25.
Shanghai-based Focus Media climbed to $24.23, the highest closing level since Nov. 18. It sank as much as 5.4 percent earlier yesterday after short-selling firm Muddy Waters LLC issued its fifth report questioning the financials of the Shanghai-based company.
Focus Media overstated the size of its LCD television network by reporting some cardboard posters as LCD displays, Muddy Waters said in the report, reiterating a “strong sell” recommendation. The short-selling company run by Carson Block said in a November report that Focus was inflating the size of its advertising network and overpaid for acquisitions.
Focus has denied the accusations from Muddy Waters. It said Dec. 22 that a survey by market research company Synovate showed that the number of LCD screens and poster frames Focus claimed to have was more than 99.95 percent accurate. It also issued a statement on Jan. 6 to “entirely” deny Muddy Waters’s allegations in a report that day questioning an acquisition.
ADRs of Focus Media have fallen 5 percent since the last trading day before Muddy Waters’s first report on Nov. 21.
Jing Lu, an investor-relations officer at Focus Media in Shanghai, didn’t return calls seeking comment after business hours.
Tudou Holdings Ltd., China’s second-largest video sharing website, slid 4.1 percent to a one-week low of $14.39, trimming its gains this year to 31 percent.
“Some investors are selling to take profits after Internet shares have risen so much this year,” said Echo He, a senior analyst at Maxim Group LLC in New York.
China’s exports probably fell 1.4 percent from a year earlier in January, according to the median estimate of 31 economist surveyed by Bloomberg News. The figure is due today.
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