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Volatility has increased and share prices of clean energy stocks fell during Q1 2007 as heavy bank losses, weakening economies and ongoing rises in basic commodities took their toll on what’s been a rapid and large-scale flow of capital into the sector, according to an April 1 New Energy Finance media release.
The 17.9% drop in the WilderHill New Energy Global Innovation Index of clean energy shares (NEX) for 2008’s first three months was larger than that for broad stock market indices. NASDAQ fell 14.1% while the S&P500 was 9.9% lower for the quarter. The NEX rose 57.9% faster last year, outperforming other indices on the upside as well.
The Power Storage sector was a bright spot in the gloom and looking out over the longer term governments’ need to meet established renewable fuels, clean energy and greenhouse gas emissions reduction targets underpins and provides strong support for clean energy companies and shares, however, according to the media release.
Hits Across the Board, Just About
Solar power was the best performing clean energy sector as represented by the NEX, and it was the hardest hit in Q1 this year, dropping 31.6%. Indicative of the effect broad fundamental economic perceptions the overall market, Chinese solar PV manufacturer Yingli Green Energy reported an 80% profit increase but nonetheless saw its shares fall 55.8% for the quarter. Not a one solar power company saw its shares rise during Q1.
The pain wasn’t limited to the solar sector however. The value of the energy efficiency sector of the NEX also fell during the quarter, as did hydrogen and fuel cells, and biofuels. The energy efficiency sector lost 20.1% of its value, the hydrogen and fuel cells sector dropped 24.6%. Shares of biofuels companies continue to suffer from the ongoing controversy over the role their production plays in rising food prices and deforestation
The Wind and Renewables-Other sections of the NEX held up comparatively well. The Wind sector of the index dropped 8.1% while Renewables-Other, comprised mainly of geothermal and mini-hydro companies, lost 5.1%.
The Power Storage sector proved to be a Q1 haven, increasing 10% in value. Four of the NEX’s top Q1 performers are included in this section of the index, including Sanyo Electric, whose shares rose 36.4%.
There was a geographic discrepancy in NEX shares, New Energy pointed out. The five worst performers are all listed in the US while seven of the ten issues whose shares rose are located elsewhere. Japanese index constituents were the best performers in Q1. Japan Wind Development Company, whose shares are listed on the Tokyo Stock Exchange, shot up 72.4%.
Nice summary. My only beef is that I feel the obsession with quarterly results is inherently contrary to the principals of sustainability. We're in this for the long haul and whether or not there are a few bad quarters here and there shouldn't be a big deal.
By tying people's bonuses to quarterly performance I believe we create an incentive for short-term, unsustainable thinking.
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