Coal up, renewables down as markets weigh Trump win

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Not even 24 hours after Trump’s election win, global stock markets are foretelling a comeback for the most carbon-intensive fossil fuels.

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As tens of thousands of words are written on what a US Trump presidency means for America’s clean energy industry, and more broadly for renewables and climate efforts around the world, the numbers of the global stock markets tell their own story.

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With the knowledge that Trump is “not a great believer in anthropogenic global warming,” and seems to be equally disenchanted with renewable energy (wind turbines, Scotland, don’t even!), and has promised to revive America’s coal sector – and eviscerate the EPA – the markets have been quick to reflect where they think things are headed.

As Reuters reports, already the prospect of a shift in policy under Trump has lifted the shares of US mining equipment giant Caterpillar, as well as North American railroads and other companies tied to fossil fuels.

Glencore, the world’s top coal trader, surged more than 7 per cent on Wednesday, according to Bloomberg. And US coal giant Peabody Energy – which recently succumbed to bankruptcy and is looking to sell its assets in Australia – surged as much as 67 per cent.

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Shares of other big coal miners such as Anglo American, BHP Billiton and Rio Tinto also rose between 2 per cent and 4 per cent on Wednesday, Bloomberg said.

At the same time, it has slammed the shares of renewable energy firms. Seeking Alpha reported on Thursday that the stock price of US renewables heavyweight First Solar was “hammered to a 52-week low” at below $US32 a share. (Although it also argues Trump will be a positive for US-based solar firms.) SunPower Corp and Canadian Solar also fell.

And Bloomberg reports that Vestas Wind Systems, the world’s biggest wind-turbine maker, plunged as much as 13 per cent, while fellow turbine makers Spain’s Gamesa, and Germany’s Nordex also fell.

And back in the US, shares of newly profitable electric vehicle maker Tesla Motors – which as Reuters points out benefits from federal tax breaks for electric vehicles – sank 3.4 per cent to its lowest price since February.

“The swing foretells a story of the most carbon-intensive fossil fuel making a comeback, while the fight against climate change – and investment in wind and solar power – languishes,” write Bloomberg analysts Javier Blas and Anna Hirtstein.

As they point out, Trump’s only major energy policy speech so far promised to rescind “job-destroying” environmental regulations within 100 days of taking office and cancel the climate deal reached last year in Paris.

If he delivers on these promises, they write, “he could effectively roll back eight years of US energy policy,” with consequences to industry giants like Exxon Mobil and also for oil-rich nations.

“The oil and gas industry is a clear winner with the new president,” said Alexandre Andlauer, head of oil at research firm Alphavalue in Paris. “US oil companies have a better future today than yesterday.”

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On Greentech Media, Tom Konrad – who is a manager and stakeholder in the Green Global Equity Income Portfolio (GGEIP), a private fund which invests in YieldCos and other high-income green stocks – is “moving decisively into cash.”

“Other than for fossil fuel companies (which I refuse to invest in), I don’t see a Trump presidency being good for much of the economy, or the stock market,” he writes.

“As Kenny Rogers put it, you have to ‘know when to walk away, and know when to run.’ In my opinion, now is the time to walk away. I’d rather not wait until it’s time to run.

“When you have cash,” he adds, “a bear market is a buying opportunity. When you have only stocks, even the best stocks, a bear market just pain.”

But Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change, a European forum for 128 investors with more than €13 trillion in assets, is more optimistic, descirbing the trend towards greener growth as “irreversible”.

“Renewables have already overtaken coal as a global power source, electric vehicles are the growth segment of the auto industry and jobs are being created in clean energy sectors faster than any other,” she told Reuters.

And even Vestas is reserving its judgment, for now. According to another Reuters report, the Danish company said on its Twitter feed on Thursday it would not speculate so soon after the election about the renewable energy sector during Trump’s presidency.

“Wind and renewable energy have broad bipartisan support. Polls show that almost 80 per cent of Trump supporters want more wind farms built in the United States,” it said.

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8 Comments
  1. Bristolboy 3 years ago

    We shouldn’t overexaggerate the market movements. Share prices of wind manufacturers such as Vestas fell massively, but they are still above levels of a year ago and massively up over the last 5 years. The reverse is true for coal – Peabody may have had a massive one day surge but it is still well down on a year ago.

    Plus, it is probably likely that there will be a correction over the coming days – historically when there had been such a big swing in such a short space of time the market overshoots.

    • Oliver 3 years ago

      Five years ago Peabody’s share price was over $500, now they are talking about a share price jump into the high-teens. The transition is underway.

      • Bristolboy 3 years ago

        And even after the drop following the election the Vestas share price is 10x larger than it was about 4 years ago.

  2. Brian Tehan 3 years ago

    Just share market sheep. How much of Vestas market is in the USA and how much of that is at risk? Unless Trump bans wind turbines, all his win will dd is to reduce the potential market by some amount. Buy Vestas!

    • Bristolboy 3 years ago

      Today’s Financial Times said Vestas earn about 40% of their revenue from North America. Whilst a good proportion of this revenue comes from USA, some inevitably comes from Canada etc. Furthermore, some will be from “service” and so also highly unlikely to be affected. Therefore whilst material, I doubt it will be any way terminal for Vestas especially as they have also just announced that 2016 revenues will be higher than previous expectations.

  3. Adam Smith 3 years ago

    So sell coal and buy renewables! It is only a blip so far. Renewables are beyond the turning point for justification on their own merits. Getting a bit sick of the whining and hysterical end of world predictions from commentators. We will all be in auto pilot EV’s within 10 years.

  4. Kenshō 3 years ago

    Long term outlook for America:

    One of my three degrees is social work, and they are trained in assessment in other contexts, so I’m putting my position forward along with all the political commentators and economists. Trump is the right candidate for the job and this is my reasoning:

    a) Trump campaigned based upon a need for radical transformation and Clinton was more interested in tweaking the present political/economic order,

    b) Trump is like a shark with an inner radar with a blood lust for a country’s redemption and Clinton is like a smiling puppet who despises the “deplorables”. In contrast, Trump appears to have identified his personal destiny is tied to the American people. Clinton had not,

    c) Despite Trumps ability or intelligence to apprehend a bigger ecological picture, to immediately grasp the science, Trump is genuine. He wants to win. He’s suffered personal financial loss and is aware comprehensive structural changes are necessary. As a entrepreneur Trump understands leadership is performance based and he has stated “I alone can fix this”. Despite the likability of his character or shortcomings of ecological awareness, Trump is attempting to shoulder the responsibility for the redemption of a country in crisis. A bold, sincere and modestly intelligent leader is better than an insincere puppet who despises the “deplorables”. Trump’s character style of being aggressive, controlling, ambitious, seemingly in love with himself, arrogant, great confidence in his ability, is the best character to lead in crisis. He will undoubtably search around for a path, make hard decisions and attempt to navigate to the best of his ability.

    All in all, Trump campaigned based upon a recognition America is in dire crisis, will be much sharper thinking on his feet than Clinton, more in the present moment, and his recognition he and the “deplorables” are in the “same ship America Economy”, is a form of caring. Rubbing shoulders in a much bigger context of consultants and advisors will likely broaden his mind and sharpen his identification of a path forward. Like Hanson, he is to be taken seriously and represents a growing discontent of the broadest population. Now we watch how Trump’s awareness, analysis, orientation, direction and care of the American people unfolds. In contrast to those who navigate in more objective market contexts, I’m moderately optimistic for a “long term” outlook. Even if Trump fails, I’m extremely confident this period of history will be a radical transformation, with the old trickle-down economic theory failing miserably, resulting in America either brushing with civil war or rising like a phenix into social justice and true human liberty.

    • MaxG 3 years ago

      A reasonable assessment… we’ll see, whether he takes on advice, and how he grows in the role…

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