Solar Stocks Slide as Chinese Economy Appears to Slow

Joel Anderson |

Solar stocks were broadly down on Monday as the entire segment appeared to lose ground. The slip caused the Guggenheim Solar ETF (TAN) to lose 1.56 percent on the day, with losses as high as 4.4 percent in the late morning prior to rebounding before close.

The sell-off appeared to be part of a broad, market-wide slip after news that Chinese manufacturing had slowed again. The flash Markit/HSBC Purchasing Managers' Index (PMI) dropped to 48.1 in March, a sign that manufacturing was shrinking (any reading below 50 demonstrates contraction, while any reading above 50 means growth) and its lowest level in over eight months.

As is typical for the segment, the stocks were mostly trading as a monolith, with a number of different companies sliding.



The Elon Musk-chaired SolarCity  (SCTY) lost 3.8 percent, JA Solar Holdings  (JASO) was down 4.8 percent, Yingli Green Energy (YGE) fell 2.94 percent, Canadian Solar (CSIQ) was off 6.03 percent, and Trina Solar Limited (TSL) was the day’s big loser as it shed 8.85 percent. Industry leader First Solar  (FSLR) , though, managed to buck the trend by gaining 0.65 percent.

The news about Chinese manufacturing would likely affect solar more than other industries as Chinese companies are prominent players and the nation represents an important growth market for the technology.

In addition to the day’s broader sell-off, solar stocks could very well be collectively due for a pull back. The growth for the solar industry has been tremendous over the last two years, with as much solar capacity installed in the United States in the last 18 months as had been cumulatively built prior to that period.

Since finding a bottom in November of 2012 in the midst of a market glutted by cheap Chinese panels, solar stocks have been on a massive bull run that has seen the Guggenheim Solar ETF triple in value since that point. Give this sort of incredible increase in valuation, solar stocks may begin to see a pull-back even as they find success. In short, the market may be determining that its already priced a considerable amount of growth in and the current valuations throughout the industry may be a touch too “sunny.”

If that’s the case, it could mean that 2014, while projected to be a strong year for solar companies, could be a relatively rough one for solar stocks.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
TSL Trina Solar Limited Sponsored ADR (Cayman Islands) n/a n/a n/a 0 Trade
YGE Yingli Green Energy Holding Company Limited ADR 2.50 0.00 0.00 41,736 Trade
SCTY SolarCity Corporation n/a n/a n/a 0 Trade
JASO JA Solar Holdings Co. Ltd. 6.19 -0.03 -0.48 659,920 Trade
FSLR First Solar Inc. 45.96 -2.10 -4.37 2,383,572 Trade
CSIQ Canadian Solar Inc. 14.99 -1.64 -9.86 3,122,608 Trade
AJGFF Atlantis Jpn Grwth Fd Ord 1.88 0.00 0.00 0

Comments

Emerging Growth

Blow & Drive Interlock Corp

Blow & Drive Interlock Corp manufactures, markets, leases, installs and monitors a Breath Alcohol Ignition Interlock Device mechanism on the steering column of an automobile and into which a driver…

Private Markets

iPRO Network, LLC

We provide the platform, tools, and resources to empower individuals and professionals to market desirable goods and services to the public, taking the place of traditional methods of commerce.

Mesa-Marshall 2 Well Project

MESA Resources ("MESA") is sponsoring the development of the two well direct drilling project -- "Mesa-Marshall #1-2". MESA, founded in 1992, is engaged in the acquisition, exploration and development of…