China’s Green Energy Stocks Surge as Middle East War Upends Oil Markets

Shares of Chinese battery makers and green energy manufacturers have jumped since the start of the war in the Middle East as investors bet on higher global demand for renewable energy and electric vehicles, as the conflict traps most of the Middle East’s oil and gas supply at the Strait of Hormuz.

Over the past three weeks, domestic energy sources have gained prominence everywhere in the world, which is experiencing the biggest supply disruption in the history of the oil market. The stranding of Qatar’s LNG supply and the damage to its liquefaction facilities that could take years to fully repair are also driving increased investor interest in clean energy.

That has been a huge boost to green energy stocks in China, which is the world’s biggest renewable energy developer and a dominant supplier of batteries, wind turbines, solar panels, and other critical components for clean energy solutions.

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China’s CSI Green Electricity Index has gained 6% so far this month and the CSI New Energy Index has risen by 2%, even if the benchmark Shanghai Composite Index has lost 6% so far in March amid the frequent global equity selloffs when oil prices were soaring.

Shares in solar power developer GCL Energy Technology Co Ltd (SHE: 002015) have surged by 57% in one month, with most of the rally taking place after the war in the Middle East began on February 28.

Contemporary Amperex Technology Co Ltd (CATL), the battery giant, has gained nearly 20% in March, the EV manufacturing giant BYD has jumped by 22%, and solar energy developer Sungrow has seen its stock rise by about 19%.

Chinese green energy companies are well-positioned to benefit from the global rethink of high dependence on fossil fuel imports that the war will bring, according to Yuan.