Investors are rushing into Chinese renewable stocks, betting the oil shock triggered by the Iran war will boost global demand for green energy, a sector China dominates.
Such a portfolio trend in Asia, spurred by heightened worries about energy security and growing distrust in the U.S.'s reliability, contrasts with a shift in the United States back toward oil and gas.
"When you take a step back, the dust settles or the price of oil starts to come back down, whatever that may be ... countries now need to focus on energy security," Aaron Costello, head of Asia at Cambridge Associates, told a conference in Hong Kong on Monday.
"They need to further build out their renewables, build out their energy grids, maybe more nuclear power, more focus on defence. The U.S. has become, if not unreliable, certainly more erratic."
Since the U.S.-Israeli war against Iran erupted on February 28, money has been moving into Chinese stocks in areas ranging from solar and wind energy to electric vehicles and batteries.
The CSI Green Electricity Index has climbed 6% in March, while the CSI New Energy Index is up 2%, despite the benchmark Shanghai Composite Index slumping 8% amid war-induced panic selling.
Industry leaders have outperformed, with solar energy giant GCL Energy Technology surging 48% so far this month.
Battery king Contemporary Amperex Technology has jumped 15% and China National Nuclear Power Co is up 8%.
Yuan Yuwei, a hedge fund manager at Trinity Synergy Investments, said he's made long bets on China's renewables, judging they will benefit from state support and higher export demand.
Against the backdrop of the war and resulting oil shock, "China will definitely boost investment in energy", said Yuan.
In addition, "after this war, people would have a second thought on gas-powered cars", a trend that will benefit Chinese electric vehicle makers and battery producers, he said.
Lin Sheng, Shenzhen-based chief investment officer at Wish Fund Management Co, said that the current energy crisis will prod many countries to pay attention to energy security and their overall energy mix, which will increase Chinese renewables exports.
"Some of these sectors suffering from oversupply will turn quite profitable going forward," he said, adding the stock market correction provides a very good opportunity to buy Chinese renewables.
Source Name : Economic Times