Solar energy stocks jump as Buffet's investment lifts sentiment
CNATAIPEI -- Solar energy stocks in Taiwan moved sharply higher Friday morning on news that billionaire investor Warren Buffet had increased his investment in the sector in the United States, dealers said.
January 5, 2013, 12:06 am TWN
Many investors appeared bullish on local solar energy stocks after shares of United States-based SunPower Corp. gained more than 40 percent on Wall Street Thursday on the back of Buffet's acquisition of the U.S. firm's two development projects, they said.
As of 11:27 a.m., shares of Sino-American Silicon Products Inc. had risen by the daily maximum of 7 percent to NT$38.05 (US$1.31), shares of Motech Industries Inc. had gained 7 percent to NT$31.10, and E-Ton Solar Tech Co. had also risen 7 percent to NT$14.00. The index of the over-the counter market, where the three stocks are traded, was up 0.06 percent at 105.09, while the Taiwan Stock Exchange's benchmark weighted index was down 0.79 percent at 7,774.80.
“It seemed that Buffet's move has bolstered investor confidence in the solar energy market, which has been hit hard by supply gluts in the past year,” Horizon Securities analyst Benson Huang said.
“Many investors have high hopes that the global solar energy market will bottom out in the first quarter of this year at the earliest as the world economy shows signs of a recovery,” Huang said.
“Buffet's investments simply served as a catalyst to stir up buying in solar energy stocks at home and abroad,” he added.
SunPower Corp. announced Wednesday that MidAmerican Energy Holdings Co., Buffet's solar energy business arm, announced it would spend US$2 billion (NT$58 billion) to US$2.5 billion to buy two solar development projects in California from the company.
After the announcement, Lazard Capital Markets upgraded the solar power specialist to a “buy” rating, leading shares of SunPower to soar almost 48 percent on Wall Street Thursday.
Huang said the buying of solar energy stocks in Taiwan also reflected expectations that China will come up with new incentives to encourage renewable energy development, which could help lower inventory and stabilize product prices.
In addition, a trade dispute on solar cells between Beijing and Washington have prompted some foreign buyers to shift orders to Taiwan from China to avoid high anti dumping tariffs imposed by the U.S., Huang said.
Huang cautioned, however, that it was too early to say when an oversupply in the global solar energy market would be reversed.
According to TrendForce, a Taiwan-based market information advisory firm, prices of solar energy products are unlikely to stage a rebound in 2013 as the market remains haunted by a supply glut.
“The local bourse remains awash in liquidity,” Huang said. “Investors tend to hunt bargains to park their money, and solar energy stocks, which had consolidated for some time, look attractive at the moment.”
“But before these companies report an improvement in fundamentals, their shares could remain volatile,” he said.