Green trades trump red markets
In the long term there will be a push to accelerate decarbonisation for reasons of self-sufficiency
Not everything is the same in equities. Fearing investors, decarbonisation is dominating stock sales this year.
Chinese electric car battery champion Contemporary Amperex Technology, CATL, is one example. Dozens of investors bid enthusiastically last week for his €6.3 billion private placement on the Shenzhen Stock Exchange, with twice as many orders as bid. It is the largest operation on the Chinese Stock Exchange this year and the second largest in the world… after the IPO of 10.1 billion LG Energy Solutions, CATL’s South Korean rival.
even numb utilities state-owned have turned to the markets. A few months ago, the Dubai Electricity and Water Authority sold 5.7 billion shares as an opportunity to explore renewable storage technologies; The French government tried to appease EDF investors, hard-pressed by nuclear outages, by backing a €3.2bn rights issue.
Facing a 71% plunge in IPO value through May, these green-tinted deals are proving a rare bright spot. They account for two thirds of the 47,000 million raised in the 10 main global stock market operations, we estimate.
Although some governments have turned back to fossil fuels, the latest investments suggest that in the longer term there will be a push to accelerate the green transition for reasons of self-sufficiency. Even in China, where imports of Russian products have soared, Beijing has published policies promoting renewables and has launched more subsidies for the purchase of electric cars.
The rise in raw materials threatens to erode profits and make new investments more expensive, but the rise in energy and greater market penetration could offset this. The crash in the markets may also attract some fresh eyes. CATL’s valuation has fallen to 59 times expected earnings, down from 80 times six months ago.
