PV stocks rise after roller-coaster 2012

Investors buoyed by government measures to boost struggling sector

Photovoltaic stocks increased sharply on Thursday, with Xi'an LONGI Silicon Materials Corp,Foshan Nationstar Optoelectronics Co Ltd and EGing Photovoltaic Technology CoLtd all climbing to their 10 percent daily trading limit.

After a roller-coaster year in 2012,investors are hoping that China's photovoltaic industry may enjoy brighterprospects in 2013.

Their renewed hope seems to be based onmany favorable factors.

The State Council, China's cabinet,announced on Dec 19 a range of measures to boost the nation's struggling PVindustry.

The announcement said China will acceleratestructural adjustment and technological improvements in the PV sector, andencourage mergers and restructuring among manufacturers to phase out outdatedcapacity.

Shen Hongwen, a researcher at the newenergy department of China Investment Corporation, said PV stocks increasedslightly on the news, but more measures are needed to ensure the industry'srecovery.

Under the second batch of a governmentprogram, more than 2.83 gigawatts of solar projects will be installed acrossChina. In addition, the Finance Ministry said in December it would roll out afurther 7 billion yuan ($1.1 billion) in subsidies for domestic solar PVdemonstration projects.

Some photovoltaic enterprises have alreadygot orders as a result of the program, including Yingli Green Energy HoldingCo, EGing Photovoltaic Technology Co Ltd and Tebian Electric Apparatus Stock CoLtd.

The stock prices of PV companies rosequickly after the government unveiled its measures to support the industry.

EGing Photovoltaic's stock price hasincreased from 7.9 yuan to 10.45 yuan since Dec 21. LONGI Silicon's share pricerose from 6.62 yuan to 9.24 yuan over the same period.

The Shanghai Composite Index rose 0.4percent to 2283.66 at the close on Thursday. The Hang Seng China EnterprisesIndex of mainland companies traded in Hong Kong climbed 1.1 percent.

There have been recent increases in theprice of PV products, which help buoy up the stock prices.

PV Insight, a premier international solarPV research company, released a PV products price report on Jan 2, showing thatthe price of PV products rebounded after falling for nine consecutive months.

The biggest gains are in the prices ofsilicon cells, up 3 percent, and single-crystal solar cells, which rose by 2percent.

The "Warren Buffet effect" alsoplayed a part in the PV stocks' bullish run. Buffett's MidAmerican EnergyHoldings Co has agreed to spend $2.5 billion to build two solar projects inCalifornia that are set to be the world's largest photovoltaic developments.

MidAmerican will pay Sun Power Corp between$2 billion and $2.5 billion for the 579-megawatt Antelope Valley solar projectsand to design, install and construct them, the company said on Jan 2.

Solar stock prices soared around the globeon Jan 3, spurred on by the announcement.

In addition, SMA Solar Technology AG,Germany's biggest solar company, bought a 72.5 percent stake in JiangsuZeversolar New Energy Co on Dec 21.

Pierre Pascal Urbon, chief executiveofficer of SMA Solar, said the acquisition is absolutely necessary to gainaccess to the Chinese market as all mature markets are declining, and China isforecast to be the world's biggest market for the technology in the nearfuture.

Last year, Chinese PV makers suffered majorlosses in their share prices after the US Department of Commerce decided on Oct10 to impose anti-dumping and anti-subsidy penalties on imports of Chinese PVproducts.

The department decided to activate finalanti-subsidy and anti-dumping duty rates ranging from 24 to 255 percent onimports of Chinese solar products since the spring of the previous year.

Moreover, any future Chinese importsentering the United States will be subject to reviews that could result inhigher duty rates for those imports.

Following that, the European Commissionalso launched an anti-subsidy investigation regarding Chinese PV products onNov 8 following confirmation of its anti-dumping investigation on Sept 6.