(Nov 4): Renewable energy stocks rallied around the world after the Democrats won control of both chambers of Congress in the US midterm elections, an outcome seen as supporting more favourable policy for the industry.
Denmark’s Orsted A/S, an operator of offshore wind farms, was the biggest gainer in Europe, rising as much as 8.1%, with Vestas Wind Systems A/S and SMA Solar Technology AG among others climbing.
In US premarket trading, First Solar Inc advanced as much as 9.2% and Sunrun Inc added as much as 9.4%.
That followed similar gains in Asia: South Korea’s Hanwha Solutions Corp surged 19%, while HD Hyundai Energy Solutions Co and OCI Holdings Co jumped 12% and 10% respectively.
According to Barclays plc analysts, the midterm results ease political risk on US renewables and supporting networks.
“It potentially reduces the risk of further political interference with renewable energy incentives and provides greater protection for the long-term economics of US wind, solar and battery storage investments,” the analysts led by Peter Crampton wrote in a research note.
“This should help ease investor concerns around regulatory uncertainty, support confidence in future project returns and potentially drive a reduction in the risk premium applied to US renewable assets."
Investors see a Democratic wave as supportive of companies in the clean energy supply chain, including solar and batteries, at the expense of the traditional energy sector. Renewable stocks are also benefiting from a rotation away from artificial intelligence-related stocks.
“The blue trade is showing up already with money rotating out of the AI buildout and into what a Democratic Congress favours," said Anna Wu, an investment strategist and founder of Floodlines Research. Hanwha Solutions “benefits directly if a Democratic Congress pushes back on Trump’s anti-solar policy” as its Qcells business operates big US factories, she added.
JPMorgan Chase & Co strategists had said ahead of the midterms that a “blue wave” would be encouraging for clean-energy stocks through greater support on appropriations, oversight and permitting.
Uploaded by Arion Yeow