Solar Power Stocks Brighten Under the 'Green New Deal'

[Asia Economy Reporter Eunmo Koo] Stock prices of solar power-related stocks are fluctuating following news that the government's 'Korean New Deal' will include a 'Green New Deal.' Although stock prices have not risen significantly in the short term due to earnings uncertainties caused by the novel coronavirus disease (COVID-19), it is evaluated that these stocks could benefit in the mid to long term.

According to the Korea Exchange on the 25th, OCI's stock price closed at 41,100 won on the 22nd, down 5.08% (2,200 won) from the previous trading day. Other solar power-related stocks such as Hanwha Solutions (-3.33%), Sinsung ENG (-3.54%), and Lake Materials (-2.51%) also closed lower. Solar power-related stocks, which had recently been recovering, surged on the 21st after being identified as beneficiaries of the Green New Deal, but due to earnings uncertainties and profit-taking from the short-term surge, they reversed to a decline and closed lower within a day.

Recently, stocks related to renewable energy such as solar power have shown growing expectations of policy benefits due to the government's promotion of the 'Green New Deal.' Although specific details have not yet been finalized, it is expected that stimulus measures to expand demand for renewable energy installations will be included. Researcher Yeonseung Jung of NH Investment & Securities said, "Policies to expand renewable energy will likely include the expansion of agrivoltaic projects combined with smart farming and improvements in the profitability of solar power projects through reforms of the Renewable Energy Certificate (REC) system," adding, "It is necessary to pay attention to companies that can generate stable profits due to strong exports and create additional results based on government policy expectations."

On the other hand, demand for solar power has slowed due to COVID-19, increasing uncertainties about earnings. OCI is facing the impact of a sharp drop in the price of polysilicon, the raw material for solar modules. Poor performance in the second quarter appears inevitable. Hanwha Solutions recorded favorable results in the solar power division in the first quarter, but in the second quarter, as the U.S. and Europe fall under the influence of COVID-19, a decrease in shipments in the solar power division seems unavoidable.

Researcher Dami Kim of Shinhan Financial Investment said, "In the case of medium to large projects, investment sentiment may continue to be affected whenever follow-up policies are announced," and forecasted, "The Green New Deal is likely to expand from the government's existing direction and aligns with social trends, so good returns can be expected in the mid to long term as well."

This content was produced with the assistance of AI translation services.