China cleantech stocks surge on hopes of stronger US clean energy support

Chinese cleantech stocks surged on Thursday as investors bet that the Democrats' victory in the US midterm elections could strengthen support for clean energy and benefit Chinese companies that dominate global solar, renewable energy and battery supply chains, Reuters reported.

The election outcome raised expectations that a Democratic-controlled US Congress could revive renewable energy tax credits and increase scrutiny of efforts to roll back emissions regulations under President Donald Trump.

China's STAR new energy index jumped 6.46% in morning trade. In individual stocks, inverter manufacturer Sungrow Power gained 7.45%, while solar panel maker Trina Solar advanced 5.51%. Polysilicon producer Daqo New Energy surged 9.87%, and battery manufacturer CATL climbed 5.17%.


Read more: US stocks today: Dow rallies 1,500 pts, S&P, Nasdaq over 1% as Democrats win midterm elections

According to Reuters, investors expect Chinese renewable energy suppliers to benefit if US trade restrictions ease, given China's dominant position in the global solar and energy storage industries. The US remains a large and profitable market for both sectors.

However, existing trade barriers continue to pose challenges. The United States has imposed 50% tariffs on Chinese solar products under Section 301 and 25% tariffs on Chinese grid batteries. Daqo New Energy has also faced restrictions on exports to the US over allegations of forced labour.

Reuters reported that US renewable energystocks also rallied following the Democrats' strong midterm performance, which was seen as a setback for Trump's energy policies. The US president has repeatedly criticised wind and solar power, describing them as unreliable and expensive.

Read more: Asian shares mostly advance following US midterms, though Kospi falls on selling of chipmakers

The rally could have further room to run, according to Citi analyst Pierre Lau, who cited the performance of clean energystocks following Joe Biden's 2020 election victory, when the sector continued to gain for months, Reuters reported.

Meanwhile, cleantech stocks have also benefited from investors repositioning their portfolios away from artificial intelligence-related investments, Jefferies analyst Alan Lau said, according to Reuters.

However, analysts cautioned that stronger US support for renewable energy would not necessarily translate into improved market access for Chinese exporters.

Jefferies' Alan Lau pointed out that the Biden administration had also launched several anti-dumping and countervailing duty investigations, alongside Section 301 probes targeting Chinese products, Reuters reported, highlighting the bipartisan nature of US trade restrictions on China.


(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)