As the global economy gradually recovers after the epidemic, all industries related to "green technology" have also ushered in the dawn. In particular, electric vehicles and solar glass panels have made a lot of hot stocks, and their valuations have soared. But skepticism about environmental protection stocks has been rising after a sharp fall in the US technology sector last week.
For example, Tesla, Inc., one of the hottest bulls in the world, rose 400% during the year, and the crazy situation of singing all the way forced many originally bearish Wall Street analysts to turn bullish; but since Tesla, Inc. completed the stock split last Monday, stocks are down 16% from now, even driving the technology stock sector down as a whole.
But what has happened has happened, and now the more crucial question for investors is what to do next. In less than two months, the US election results will be born, and future election results will have a more far-reaching impact on these "green" technology stocks than the stock price correction in the past.
Biden promoted the "Green New deal" and the total global investment in environmental protection reached 7 trillion US dollars.
When Donald Trump thinks of climate change, the only word he can think of is "hoax". When I think about climate change, I think about jobs.
-U.S. Presidential candidate Joe Biden
In mid-July, Democratic candidate Joe Biden announced aWorth 2 trillion dollars"Green recovery" planTo boost U.S. investment in clean energy and infrastructure, the New deal plans to spend $2 trillion over the next four years to improve clean energy in the transportation, power and construction industries. At the same time, Biden indicated that this "green new deal" will also help the US government create new economic opportunities, improve the country's aging infrastructure and deal with future climate crises.Although the plan currently has an investment of only $2 trillion, once Biden is selected, it is bound to attract more money to environmental protection projects. As a result, total global investment in environmental protection is expected to reach US $7 trillion.
In addition, if the "green new deal" is implemented, the emissions regulatory standards that have been abolished by Trump will also be restored, and the standards will only be stricter than before. The result is undoubtedly a major boon for the electric car industry-it encourages the US car market to shift more to electric vehicles, away from internal combustion engine pickups and SUVs.
But even the best analysts cannot predict the final outcome of the election. If Biden loses, how will the environmental protection industry develop in the future? According to the expectations of analysts at Credit Suisse, the world's top investment bankIf Trump is re-elected as president, the total investment in environmental protection is bound to decrease, butThe total investment will still be as high as $1.7 trillionAs shown in the following areas:
In areas related to transportation and infrastructure, more than $300 billion has been spent on electrification.
In the field of clean energy, countries around the world are working hard to achieve decarbonization targets after the launch of the EU green agreement, which means that wind and solar capacity will increase significantly in the future. New energy companies benefiting from this trend will grow by an average of 30 per cent in 2035, according to Goldman Sachs Group Group.
The environmental protection industry ushered in favorable policies, why did Tesla, Inc. fall instead?
The prospect of the United States, China and Europe uniting on the green front led to a large number of investors' confidence in environmental technology stocks, followed by an influx of money to further boost the company's share price. The market mood is too optimistic. In recent weeks, the share prices of electric car companies like Tesla, Inc. and any company associated with "technology" have risen unreasonably under the influence of market sentiment.
Things will turn back at the extreme, and losses will be lost at the end of the day.When the stock prices of companies in the environmental protection industry chain are generally high, the first to collapse must be the "bubble" the most and the weakest link.It makes more sense to support companies that build solar panels and grids to produce and transmit energy than buying electric car companies that don't even produce cars and whose share prices are out of line with real value.
The field of electric vehicles
First of all, we might as well review the Chinese electric car companies that have been listed in recent months.
$XPeng Inc. (XPEV.US) $XPeng Inc. has been established for 5 years, focusing on medium-and high-priced smart electric vehicles. In the first six months of 2020, the company delivered 5499 new cars, down from the same period last year. Even taking into account the adverse impact of the epidemic on the industry, it cannot change the fact that the company continues to lose money. On the technical level, XPeng Inc. has full-stack autopilot technology, as Sanford C. Bernstein analyst said, "so far, XPeng Inc. 's technical achievements have surpassed the larger competitors in the market." At the end of August, the company successfully raised $1.5 billion in New York through IPO, exceeding consensus expectations. But less than two weeks after the IPO, the company's share price has fallen below 10%.
$Li Auto Inc. (LI.US) $Li Auto Inc., who boasts to make "pure electric" cars, cannot strictly realize the slogan of "pure electric". According to the company's prospectus: "the energy source and power of the car comes from the battery pack and the range system." its power generation system consists of a dedicated internal combustion engine with high fuel efficiency, an electric generator and a reducer connected to them. " Therefore, whether Li Auto Inc. is energy-efficient or not, its main source of battery life is the internal combustion engine.
Although Tesla, Inc. 's excellent performance in the capital market has promoted the hype of new energy vehicles, companies like XPeng Inc. and ideal cannot dominate their own electric vehicle production in a single market, let alone surpass traditional cars.。
More established electric car makers, such as Audi AG's e-tron and Daimler's Mercedes-Benz EQC, not only have not yet built popular models, but are also struggling in the gloom of the more popular traditional car industry.
Clean energy infrastructure
Compared with electric carsThere are fewer bubbles in clean energy infrastructure and utilities, which means investors can find more robust potential investment targets.. According to the energy policies of European countries, analysts expect that in the next decadeTotal investment in this area will reach 976.8 billion US dollars.
In the United States, analysts are optimistic about the future of the solar industry.Since 2016, solar portfolio returns have exceeded 100%, compared with 55% for the S & P 500：
$first Solar (FSLR.US) $The company produces solar panels, which are mainly used in large-scale solar farms of public utilities. Although first Solar's revenue has been flat over the past two years because of the low price of product components, the company's strong balance sheet and differentiated thin-film panel technology can help it grow its share as the market grows. The stock is up about 30% year-to-date.
$Enphase Energy (ENPH.US) $The company mainly produces components such as power inverters and control systems for solar devices. These inverters convert the direct current generated by solar panels into alternating current used in the power grid to control the solar power generation system. The stock has performed significantly better than expected, up 159% year-to-date.
Source: Forbes
$NextEra Energy Inc (NEE.US) $NextEra Energy Inc is the largest utility company in the United States by market capitalization, and it has the largest solar power generation capacity outside China. The company has also invested heavily in battery energy storage and plans to build nearly 700 megawatts of energy storage projects in California by the end of 2022. The stock is up about 17% this year.
In China, analysts are generally optimistic about these new energy companies, most of which have achieved amazing stock price growth this year.：
Huaneng International Power Co., Ltd. (00902.HK) $As one of the top three listed power companies in China, Huaneng Power Intl is also increasing new wind and solar power generation, although he is inefficient in the field of renewable energy. In the first half of 2020, despite the slowdown in economic growth caused by the epidemic, the company's photovoltaic capacity increased by 20% over the same period last year, and wind power capacity increased by 11% compared with the same period last year.
$Longji shares (601012.SH) $The market capitalization of many solar product manufacturers has soared this year, such as Longji Green Energy Technology Co., Ltd., whose share price has nearly tripled since the beginning of the year.
$Xinyi Solar (00968.HK) $、$Lutheran Glass (00868.HK) $Domestic manufacturers of renewable energy products have also benefited from the booming supply and demand in the clean energy sector, and their market capitalization has been breaking through their own new highs recently. Xinyi Solar Holdings Limited, for example, rose nearly 70% this year, while its sister company Xinyi Glass Holdings Co., Ltd. rose more than 30%.
Summary
Given that climate change and its impacts-floods, droughts, wildfires, etc.-are ravaging the world, the "green recovery" plan is not only a top priority, but also an inevitable trend for future development. Only by upgrading the infrastructure can energy efficiency be improved, so public capital expenditure on the construction of environmental protection facilities is bound to show a long-term growth trend in the future.
As individual investors, what we can do is to seize this market opportunity. However, not all "green" related companies are good investment targets, and investors are advised to choose carefully rather than blindly follow the market wind.
Source: Bloomberg, Forbes
Us Stock Intelligence Officer / Rachel
