Yesterday, the World Bank said that China has the capacity to absorb the impact of the recent international financial market turmoil if it spreads to its robust economy. “Even if the financial crisis brings about a global economic slowdown, it will help China to adjust its pace of economic development,” said Louis Kuijs, senior economist for World Bank’s China office. Will Chinese solar stocks benefit from this momentum?
Photo:d’n’c’, Creative Commons, Flickr
The Chinese stock market has ignored the carnage on Western stock markets, benefiting from the “Olympic Effect.” In the past 11 Olympics, the host country’s benchmark stock index rose an average 25% in the year before the event, two UBS analysts, Louis Shan and Edmond Huang, said in a note Thursday. In the Games year, benchmarks rose in three of the past four Olympics and gained in the year following in all four cases. “If history repeats itself, we would likely continue to see a positive stock market return for China in both 2008 and 2009,” Shan and Huang said.
How does the market see the U.S. Solar vs. Chinese Solar? I constructed two indices, tracking losses between 7/19 (the record high on the DOW) to 8/16 (the recent low for the DOW). I used market cap as the weighting criterion in calculating the index return.
| U.S. Solar | ||||||
| Company | Market Cap | Weight | 7/19 high | 8/16 low | % return | Calculation column |
| WFR | 12.92 | 0.452603 | 59.99 | 49.7 | -17.15285881 | -7.763432208 |
| SPWR | 6.22 | 0.217894 | 68.93 | 59.64 | -13.47744088 | -2.936652501 |
| FSLR | 7.29 | 0.255377 | 112.9 | 74.77 | -33.77325066 | -8.624921087 |
| ESLR | 0.886 | 0.031038 | 9.82 | 8.17 | -16.80244399 | -0.52150793 |
| ENER | 1.17 | 0.040986 | 31.2 | 27.35 | -12.33974359 | -0.505762629 |
| DSTI | 0.06 | 0.002102 | 6.77 | 3.43 | -49.33530281 | -0.103696426 |
| Total | 28.546 | 1 | -20.45597278 | |||
| China Solar | ||||||
| Company | Market Cap | Weight | 7/19 high | 8/16 low | % return | Calculation column |
| CSIQ | 0.203 | 0.021963 | 11 | 6.5 | -40.90909091 | -0.89846862 |
| TSL | 1.06 | 0.114681 | 66.85 | 39.93 | -40.26925954 | -4.618134276 |
| JASO | 1.82 | 0.196906 | 40.64 | 26.6 | -34.54724409 | -6.80255158 |
| SOLF | 0.52 | 0.056259 | 13.42 | 8.68 | -35.32041729 | -1.987083954 |
| STP | 5.64 | 0.610191 | 42.99 | 31.76 | -26.12235404 | -15.9396383 |
| Total | 9.243 | 1 | -30.24587672 | |||
The U.S. solar index lost 20.46%, while the Chinese solar index lost 30.45%. Looks like Uncle Sam wins this round. Chinese solar stocks may have seen most of their downside already, providing attractive entry points if you believe that the worst is behind us.
Disclaimer: I don’t own any of the stocks mentioned above. I do not own a solar panel.