Investors bet Iran war will boost Chinese renewables demand
By Samuel Shen and Jiaxing Li
SHANGHAI/HONG KONG, March 24 (Reuters) - Investors are rushing into Chinese renewable stocks, betting the oil shock triggered by the Iran war will boost global demand for green energy, a sector China dominates.
Such a portfolio trend in Asia, spurred by heightened worries about energy security and growing distrust in Washington's reliability, contrasts with a shift in the U.S. back towards oil and gas.
"When you take a step back, the dust settles or the price of oil starts to come back down, whatever that may be ... countries now need to focus on energy security," Aaron Costello, head of Asia at Cambridge Associates, told a conference in Hong Kong on Monday.
"They need to further build out their renewables, build out their energy grids, maybe more nuclear power, more focus on defence. The U.S. has become, if not unreliable, certainly more erratic."
Since the U.S.-Israeli war against Iran erupted on February 28, money has been moving into Chinese stocks in areas ranging from solar and wind energy to electric vehicles and batteries.
The CSI Green Electricity Index .CSI931897 has climbed 6% in March, while the CSI New Energy Index .CSI000941 is up 2%, despite the benchmark Shanghai Composite Index slumping 8% amid war-induced panic selling.
Industry leaders have outperformed, with solar energy giant GCL Energy Technology 002015.SZ surging 48% so far this month.
Battery king Contemporary Amperex Technology 300750.SZ has jumped 15% and China National Nuclear Power Co 601985.SS is up 8%.
Yuan Yuwei, a hedge fund manager at Trinity Synergy Investments, said he's made long bets on China's renewables, judging they will benefit from state support and higher export demand.
Against the backdrop of the war and resulting oil shock, "China will definitely boost investment in energy", said Yuan.
In addition, "after this war, people would have a second thought on gas-powered cars", a trend that will benefit Chinese electric vehicle makers and battery producers, he said.
OIL CRISIS BOOSTS RENEWABLES DEMAND
Lin Sheng, chief investment officer at Wish Fund Management Co, said that the current energy crisis will prod many countries to pay attention to energy security and their overall energy mix, which will increase Chinese renewables exports.
"Some of these sectors suffering from oversupply will turn quite profitable going forward," he said, adding the stock market correction provides a very good opportunity to buy Chinese renewables.
Reflecting the shift, Singapore's foreign minister said the 11-member Association of Southeast Asian Nations (ASEAN) needed to do more on energy security.
"We do need to accelerate the renewable energy push. We do need to accelerate, in our case, the ASEAN power grid, for instance, to enhance resilience for all our economies," Vivian Balakrishnan told Reuters on Monday.
China's electricity output and clean technology exports already scaled record highs in 2025.
"With China's leadership in key industries such as EV, battery and power-generating equipment, Chinese exports and growth in 2027 and beyond may benefit from increased demand for these products," Goldman Sachs said in a note.
Environmental Strategies Group co-head Ulrik Fugmann said that "tectonic shifts for energy transition" are already happening in Europe, which is revisiting nuclear energy and starting to build a more resilient energy infrastructure.
"Put very simply, the cost - and certainly prolonged cost of a fossil fuel shock - far outweighs the investments needed to continue to build out renewables," he told a podcast.
"The relation between renewables, energy security and geopolitics has motivated real shifts, and accelerated with the war," said Fugmann, who predicts a multi-year renaissance in renewables.
