Carbon emission trading will become a new financial product and be traded on China's exchanges, said Mei Dewen, general manager of China Beijing Environmental Exchange (CBEE) on August 26.
Xie Zhenhua, vice minister in charge of the National Development and Reform Commission (NDRC), also noted that exploratory emission trading would be open to certain fields. Industry insiders believe that Xie's words reflect the government's positive attitude.
Experts predict that by 2012, the world carbon emission trading market may surpass the oil market as the largest global trading system. The World Bank estimated that China would take 35 to 45 percent of the world potential for CDM project activities by 2010.
China has already established a carbon emission trading system led by the CBEE, Shanghai Environment Energy Exchange and Tianjin Climate Exchange. However, unlike carbon emission trading markets in the Europe and the U.S., divisible standardized futures contracts are not included in China's three emission exchanges.
China has the largest carbon resources in the world and is the leading country in the world pipeline of CDM projects. But if China fails to establish its carbon trading market quickly enough, it may lose its pricing rights in the global carbon emission market, said Mei.
By People's Daily Online
NEWS - Commodites, Agriculture, Green Investment - NEWS
8/28/2009
FourWinds Starts $40 Million Waste-Management Investment Fund
By Chanyaporn Chanjaroen
Aug. 27 (Bloomberg) -- FourWinds Capital Management, which manages about $1.4 billion in natural-resource funds, started a private-equity fund investing in waste-management companies.
The Waste Resource Fund began this month with $40 million, Chris Armitage, the U.K. head for the Boston-based firm, said Aug. 25 in an interview in London. The fund has three local- government pension funds, from the U.K. and Norway, as investors, he said.
“We’re looking at innovative ways to make money in more than one way from a waste business,” said Armitage, who spent more than 20 years in pension management before joining FourWinds in 2006. The new fund will buy stakes of 25 percent to 40 percent in existing companies to help them expand, he said.
Waste-management companies are drawing investors as more governments act to promote recycling, curb landfills and protect the environment. Waste Management Inc., the biggest U.S. trash hauler, tried to buy Republic Services Inc. before scrapping its bid in October. Biffa Ltd. was bought in April 2008, less than two years after U.K. water company Severn Trent Plc spun it off.
“The opportunities are enormous for companies investing in areas where there is supply constraint, such as landfill, and strong demand, because of population growth and increasing wealth,” Armitage said.
The 41-company Bloomberg World Environmental Control Index added 7.1 percent this year, led by Rino International Corp., a Chinese maker of wastewater treatment equipment. The shares have jumped almost fourfold.
Still, Paris-based Suez Environnement SA, Europe’s second- biggest water company, reported a 13 percent drop in first-half profit yesterday after the world recession curbed demand for waste collection and treatment.
FourWinds may introduce another fund investing in waste- management infrastructure, Armitage said.
Aug. 27 (Bloomberg) -- FourWinds Capital Management, which manages about $1.4 billion in natural-resource funds, started a private-equity fund investing in waste-management companies.
The Waste Resource Fund began this month with $40 million, Chris Armitage, the U.K. head for the Boston-based firm, said Aug. 25 in an interview in London. The fund has three local- government pension funds, from the U.K. and Norway, as investors, he said.
“We’re looking at innovative ways to make money in more than one way from a waste business,” said Armitage, who spent more than 20 years in pension management before joining FourWinds in 2006. The new fund will buy stakes of 25 percent to 40 percent in existing companies to help them expand, he said.
Waste-management companies are drawing investors as more governments act to promote recycling, curb landfills and protect the environment. Waste Management Inc., the biggest U.S. trash hauler, tried to buy Republic Services Inc. before scrapping its bid in October. Biffa Ltd. was bought in April 2008, less than two years after U.K. water company Severn Trent Plc spun it off.
“The opportunities are enormous for companies investing in areas where there is supply constraint, such as landfill, and strong demand, because of population growth and increasing wealth,” Armitage said.
The 41-company Bloomberg World Environmental Control Index added 7.1 percent this year, led by Rino International Corp., a Chinese maker of wastewater treatment equipment. The shares have jumped almost fourfold.
Still, Paris-based Suez Environnement SA, Europe’s second- biggest water company, reported a 13 percent drop in first-half profit yesterday after the world recession curbed demand for waste collection and treatment.
FourWinds may introduce another fund investing in waste- management infrastructure, Armitage said.
8/17/2009
Solar Power Generation Capacity May Double in 2010
By Dinakar Sethuraman
(Corrects fund performance in the seventh paragraph.)
July 17 (Bloomberg) -- New solar power generation may double next year, recovering from low capacity utilization caused by the global financial crisis, as China and the U.S. increase demand for clean energy, a fund manager said.
Asian ventures led by Suntech Power Holdings Co., Trina Solar Ltd. and Canadian Solar Inc. may benefit as 10 gigawatts of electricity produced from the sun is added in 2010, from an estimated 6 gigawatts this year, said Thiemo Lang, portfolio manager at the 230 million euros ($324 million) SAM Smart Energy Fund.
“The market may not grow in capacity this year because of the negative effects of the financial crisis,” Lang said in an interview by telephone from Zurich. “Next year looks much better because we see two new regions in U.S. and China.”
New investments in clean energy may surge to $450 billion in 2012 from $150 billion in 2007 as the U.S. and Europe step up efforts to reduce emissions, Nomura Securities said. China may boost solar capacity to 10 gigawatts by 2020, enough to supply about 10 million U.S. homes, from 1.8 gigawatts now, according to the Chinese Renewable Energy Industries Association.
Suntech, the world’s largest maker of solar-power modules, and Trina Solar are among Asian companies that may gain as lower production costs give them “distinctive” advantages over manufacturers in Europe and the U.S., Lang said. Both are based in Jiangsu province in eastern China.
Shares Recovering
Suntech has gained 36 percent this year to $15.86 a share in New York, while Trina Solar has jumped 161 percent to $24.20 over the same period. Suntech is still 66 percent below its August 2008 peak of $47.81, while Trina Solar is 29 percent below its high, reached in the same month. Canadian Solar rose 108 percent this year to $13.42, still 59 percent below its August peak.
The SAM Smart Energy Fund is part of Robeco Group, a global asset manager and a unit of Rabobank Groep NV, according to an e-mail by François Vetri, a company spokesman. The fund has fallen 31 percent in the past 12 months, according to Bloomberg data, while the Bloomberg World Energy-Alternate Sources Index has declined 51 percent over the same period.
The fund owns shares in Trina Solar, Yingli Green Energy Holding Co., Canadian Solar, JA Solar Holdings Co. and Taiwan’s Gintech Energy Corp. and E-Ton Solar Tech Co., he said.
The solar panel market is oversupplied as 12 gigawatts of capacity chases 6 gigawatts of demand this year, Lang said. Producers may add as much as 50 percent more next year.
Current Capacity Glut
“In the first quarter solar utilization was only 30 percent,” Lang said. “There’s more capacity available than the market can absorb.”
The Asian suppliers were at full capacity at the end of the second quarter, while the European suppliers were operating at about 50 percent utilization, he said. Increasing use of solar power generates carbon-emission credits for polluters in Europe.
Prices of carbon credits, used by European nations to offset emissions, may stay at current levels as a contraction in manufacturing cuts demand for the credits, he said.
“I will not be amazed for prices to stay at this level,” Lang said. European Union emission permits for December delivery closed at 14.53 euros a ton yesterday on the European Climate Exchange in London. While they are up about 10 percent this month, they are down 46 percent from a year ago.
There are more opportunities to invest in Asian solar businesses compared with wind power makers as the industry has turned mature, Lang said. New wind generation capacity may expand by about 18 percent in 2010 with growth in newly installed capacity expected to be flat this year. The world added 27 gigawatts of wind power capacity in 2008.
“There are not many opportunities to invest in Asian wind companies as in solar makers,” Lang said. “Solar industry can reduce costs quite dramatically while wind turbine costs do not decline at the same pace,” he said. Electricity produced from wind and solar projects account for less than 2 percent of the global output.
To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.
(Corrects fund performance in the seventh paragraph.)
July 17 (Bloomberg) -- New solar power generation may double next year, recovering from low capacity utilization caused by the global financial crisis, as China and the U.S. increase demand for clean energy, a fund manager said.
Asian ventures led by Suntech Power Holdings Co., Trina Solar Ltd. and Canadian Solar Inc. may benefit as 10 gigawatts of electricity produced from the sun is added in 2010, from an estimated 6 gigawatts this year, said Thiemo Lang, portfolio manager at the 230 million euros ($324 million) SAM Smart Energy Fund.
“The market may not grow in capacity this year because of the negative effects of the financial crisis,” Lang said in an interview by telephone from Zurich. “Next year looks much better because we see two new regions in U.S. and China.”
New investments in clean energy may surge to $450 billion in 2012 from $150 billion in 2007 as the U.S. and Europe step up efforts to reduce emissions, Nomura Securities said. China may boost solar capacity to 10 gigawatts by 2020, enough to supply about 10 million U.S. homes, from 1.8 gigawatts now, according to the Chinese Renewable Energy Industries Association.
Suntech, the world’s largest maker of solar-power modules, and Trina Solar are among Asian companies that may gain as lower production costs give them “distinctive” advantages over manufacturers in Europe and the U.S., Lang said. Both are based in Jiangsu province in eastern China.
Shares Recovering
Suntech has gained 36 percent this year to $15.86 a share in New York, while Trina Solar has jumped 161 percent to $24.20 over the same period. Suntech is still 66 percent below its August 2008 peak of $47.81, while Trina Solar is 29 percent below its high, reached in the same month. Canadian Solar rose 108 percent this year to $13.42, still 59 percent below its August peak.
The SAM Smart Energy Fund is part of Robeco Group, a global asset manager and a unit of Rabobank Groep NV, according to an e-mail by François Vetri, a company spokesman. The fund has fallen 31 percent in the past 12 months, according to Bloomberg data, while the Bloomberg World Energy-Alternate Sources Index has declined 51 percent over the same period.
The fund owns shares in Trina Solar, Yingli Green Energy Holding Co., Canadian Solar, JA Solar Holdings Co. and Taiwan’s Gintech Energy Corp. and E-Ton Solar Tech Co., he said.
The solar panel market is oversupplied as 12 gigawatts of capacity chases 6 gigawatts of demand this year, Lang said. Producers may add as much as 50 percent more next year.
Current Capacity Glut
“In the first quarter solar utilization was only 30 percent,” Lang said. “There’s more capacity available than the market can absorb.”
The Asian suppliers were at full capacity at the end of the second quarter, while the European suppliers were operating at about 50 percent utilization, he said. Increasing use of solar power generates carbon-emission credits for polluters in Europe.
Prices of carbon credits, used by European nations to offset emissions, may stay at current levels as a contraction in manufacturing cuts demand for the credits, he said.
“I will not be amazed for prices to stay at this level,” Lang said. European Union emission permits for December delivery closed at 14.53 euros a ton yesterday on the European Climate Exchange in London. While they are up about 10 percent this month, they are down 46 percent from a year ago.
There are more opportunities to invest in Asian solar businesses compared with wind power makers as the industry has turned mature, Lang said. New wind generation capacity may expand by about 18 percent in 2010 with growth in newly installed capacity expected to be flat this year. The world added 27 gigawatts of wind power capacity in 2008.
“There are not many opportunities to invest in Asian wind companies as in solar makers,” Lang said. “Solar industry can reduce costs quite dramatically while wind turbine costs do not decline at the same pace,” he said. Electricity produced from wind and solar projects account for less than 2 percent of the global output.
To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.
The top 10 U.S. states for cleantech in 2009
August 17, 2009 by Shawn Lesser
The beautiful thing about the U.S. is that we have abundant renewable resources—both in our environment and in our brain power.
So be it capturing the amazing wind resources in Texas, tapping into the great brain cluster in Boston with MIT and Harvard, or transitioning auto workers in Michigan and Ohio to produce wind turbines, every state has its own special mix of renewable resources that are just being waiting to be tapped.
But some states are doing a better job than others at bringing together all the parts of the economy with natural resources and manufacturing know-how.
A huge piece of the puzzle is political will. Public policies on a federal, state and local level are and will continue to be an important driver and indicator for the future of the cleantech economy. Whatever inherent advantages a region or state may have, it requires the firm commitment and backing of political leaders for any initiative to gain traction.
Obviously it’s been a challenging time for industries across the board, but cleantech has a bright future. As my friend Nick Parker, executive chairman of the Cleantech Group, said in January 2009: "In 2008, there was a quantum leap in talent, resources and institutional appetite for clean technologies. Now, more than ever, clean technologies represent the biggest opportunities for job and wealth creation."
So which states are the leaders in the space? The good news is every state in the union is involved in cleantech in some way, so in a sense we can’t say there are any losers. But we can say there are some bigger winners.
I started by looking at data points that were are available on cleantech jobs and job growth, cleantech companies, and VC dollars invested. From there, I tried to look at more intangible aspects of each state's initiatives, especially government policies.
In the end I tried to come up with a fair rating, but I am well aware that certain people will disagree. That's fine; the main reason for this rating is to open up the conversation.
So here are my rankings for the top cleantech states of 2009:
California is the 800-pound gorilla of cleantech, with half of all cleantech-related venture capital going to the Golden State, a total of $6.5 billion from 2006 to 2008. Backed by the leadership of Governor Arnold Schwarzenegger, they also have the most aggressive greenhouse-gas reduction targets in the country.
Texas boasts the world’s largest wind farm, and generates more electricity from wind than any other state. Moreover, Texas attracted more than $716 million in cleantech-related venture capital funds between 2006 and 2008.
Massachusetts can lay claim to the best university cluster in the world, with MIT, Harvard University, Boston University, Tufts University and Northeastern University helping attract from 2006 to 2008 $1.2 billion in venture capital funds—second only to California.
Colorado is cultivating a true cleantech culture, with roughly 200 cleantech firms dotting the area stretching from Colorado Springs to Fort Collins. The state has attracted more than 17,000 cleantech jobs from 2006 to 2008. Colorado was also able to attract Vestas Wind Systems, the world's leading supplier of wind turbines, to open four new plants—an investment of more than $600 million.
New Jersey is aiming to become the new Sunshine State, thanks to its strong public-private partnership. Back by Gov. Jon Corzine, New Jersey is the best place to do solar in the country. Very early in. Gov. Corzine’s administration established the Solar Renewable Energy Certificate (SREC) Program, which shifts the solar market away from a dependence on rebates to drive solar growth.
Tennessee is the billion dollar baby, thanks to strong political foresight of Gov. Phil Bredesen. That has helped the Volunteer State land two of the biggest cleantech deals in the last several years: Hemlock Semiconductor’s announced plans for a $1.2 billion polysilicon plant and German chemical firm Wacker Chemie’s announced plans for a $1 billion polysilicon factory in Tennessee (see Cleantech industry in the U.S. South emerging from stealth).
Pennsylvania, meanwhile, is itself trying to kick the fossil fuel habit, with strong leadership from Gov. Ed Rendell in attracting cleantech startups and the establishment of a $650 million energy fund to support the sector. Gov. Rendell was pushing "green" before it was a buzz word, back when he was mayor of Philadelphia (see Pennsylvania invests $23M to quadruple solar capacity).
New York aims to replace the Big Apple with the Green Apple, thanks to initiatives designed to lower the state’s carbon footprint and the establishment of several education-related and startup cluster initiatives around the cleantech sector.
Ohio is retooling for a green energy transition, moving away from heavy industry such as auto manufacturing in favor of green initiatives, such as seeking to establish itself as the second biggest wind turbine parts producer in the country. In fact, Ohio ranked among the top five states with the most jobs in clean energy, energy efficiency and environmentally friendly production in 2007.
Oregon, and specifically the Portland metro area, has established itself as a thought-leader in progressive environmental policies for the past 30 years. The area’s highly attractive living standards make it a powerhouse in terms of continuing to attract the intellectual capital that will drive the cleantech revolution. Oregon has had explosive growth rates in cleantech jobs around 50 percent!
Three additional states that deserved honorable mention even though they did not make our top 10: Michigan, Washington and North Carolina. All three have made strong strides in the area of cleantech: Michigan specifically in next generation battery productions (see Stealthy Khosla-backed battery startup driving economic makeover?), Washington in the area of hydro electric power, and North Carolina with great innovations coming out of the Research Triangle.
I had a conversation with Doug Cameron, managing director and chief science adviser at Piper Jaffrey, one of the most active investment banks in the cleantech/renewable space. Doug was previously the chief scientific officer for Khosla Ventures. I think he stated it best: "My hope is the clean and green get so integrated into everything we do that most businesses and industries become green, and it is the ones that are not that we highlight and count." I think that says it the best, and I am 100-percent of the same mindset!
Shawn Lesser is the president and founder of Atlanta-based Sustainable World Capital, which is focused on fund-raising for private equity cleantech/sustainable funds, as well as private cleantech companies. For information, visit his Web site.
Want to author a guest column yourself? We welcome contributions, and would like to hear from you. Guidance and directions here.
The beautiful thing about the U.S. is that we have abundant renewable resources—both in our environment and in our brain power.
So be it capturing the amazing wind resources in Texas, tapping into the great brain cluster in Boston with MIT and Harvard, or transitioning auto workers in Michigan and Ohio to produce wind turbines, every state has its own special mix of renewable resources that are just being waiting to be tapped.
But some states are doing a better job than others at bringing together all the parts of the economy with natural resources and manufacturing know-how.
A huge piece of the puzzle is political will. Public policies on a federal, state and local level are and will continue to be an important driver and indicator for the future of the cleantech economy. Whatever inherent advantages a region or state may have, it requires the firm commitment and backing of political leaders for any initiative to gain traction.
Obviously it’s been a challenging time for industries across the board, but cleantech has a bright future. As my friend Nick Parker, executive chairman of the Cleantech Group, said in January 2009: "In 2008, there was a quantum leap in talent, resources and institutional appetite for clean technologies. Now, more than ever, clean technologies represent the biggest opportunities for job and wealth creation."
So which states are the leaders in the space? The good news is every state in the union is involved in cleantech in some way, so in a sense we can’t say there are any losers. But we can say there are some bigger winners.
I started by looking at data points that were are available on cleantech jobs and job growth, cleantech companies, and VC dollars invested. From there, I tried to look at more intangible aspects of each state's initiatives, especially government policies.
In the end I tried to come up with a fair rating, but I am well aware that certain people will disagree. That's fine; the main reason for this rating is to open up the conversation.
So here are my rankings for the top cleantech states of 2009:
California is the 800-pound gorilla of cleantech, with half of all cleantech-related venture capital going to the Golden State, a total of $6.5 billion from 2006 to 2008. Backed by the leadership of Governor Arnold Schwarzenegger, they also have the most aggressive greenhouse-gas reduction targets in the country.
Texas boasts the world’s largest wind farm, and generates more electricity from wind than any other state. Moreover, Texas attracted more than $716 million in cleantech-related venture capital funds between 2006 and 2008.
Massachusetts can lay claim to the best university cluster in the world, with MIT, Harvard University, Boston University, Tufts University and Northeastern University helping attract from 2006 to 2008 $1.2 billion in venture capital funds—second only to California.
Colorado is cultivating a true cleantech culture, with roughly 200 cleantech firms dotting the area stretching from Colorado Springs to Fort Collins. The state has attracted more than 17,000 cleantech jobs from 2006 to 2008. Colorado was also able to attract Vestas Wind Systems, the world's leading supplier of wind turbines, to open four new plants—an investment of more than $600 million.
New Jersey is aiming to become the new Sunshine State, thanks to its strong public-private partnership. Back by Gov. Jon Corzine, New Jersey is the best place to do solar in the country. Very early in. Gov. Corzine’s administration established the Solar Renewable Energy Certificate (SREC) Program, which shifts the solar market away from a dependence on rebates to drive solar growth.
Tennessee is the billion dollar baby, thanks to strong political foresight of Gov. Phil Bredesen. That has helped the Volunteer State land two of the biggest cleantech deals in the last several years: Hemlock Semiconductor’s announced plans for a $1.2 billion polysilicon plant and German chemical firm Wacker Chemie’s announced plans for a $1 billion polysilicon factory in Tennessee (see Cleantech industry in the U.S. South emerging from stealth).
Pennsylvania, meanwhile, is itself trying to kick the fossil fuel habit, with strong leadership from Gov. Ed Rendell in attracting cleantech startups and the establishment of a $650 million energy fund to support the sector. Gov. Rendell was pushing "green" before it was a buzz word, back when he was mayor of Philadelphia (see Pennsylvania invests $23M to quadruple solar capacity).
New York aims to replace the Big Apple with the Green Apple, thanks to initiatives designed to lower the state’s carbon footprint and the establishment of several education-related and startup cluster initiatives around the cleantech sector.
Ohio is retooling for a green energy transition, moving away from heavy industry such as auto manufacturing in favor of green initiatives, such as seeking to establish itself as the second biggest wind turbine parts producer in the country. In fact, Ohio ranked among the top five states with the most jobs in clean energy, energy efficiency and environmentally friendly production in 2007.
Oregon, and specifically the Portland metro area, has established itself as a thought-leader in progressive environmental policies for the past 30 years. The area’s highly attractive living standards make it a powerhouse in terms of continuing to attract the intellectual capital that will drive the cleantech revolution. Oregon has had explosive growth rates in cleantech jobs around 50 percent!
Three additional states that deserved honorable mention even though they did not make our top 10: Michigan, Washington and North Carolina. All three have made strong strides in the area of cleantech: Michigan specifically in next generation battery productions (see Stealthy Khosla-backed battery startup driving economic makeover?), Washington in the area of hydro electric power, and North Carolina with great innovations coming out of the Research Triangle.
I had a conversation with Doug Cameron, managing director and chief science adviser at Piper Jaffrey, one of the most active investment banks in the cleantech/renewable space. Doug was previously the chief scientific officer for Khosla Ventures. I think he stated it best: "My hope is the clean and green get so integrated into everything we do that most businesses and industries become green, and it is the ones that are not that we highlight and count." I think that says it the best, and I am 100-percent of the same mindset!
Shawn Lesser is the president and founder of Atlanta-based Sustainable World Capital, which is focused on fund-raising for private equity cleantech/sustainable funds, as well as private cleantech companies. For information, visit his Web site.
Want to author a guest column yourself? We welcome contributions, and would like to hear from you. Guidance and directions here.
8/14/2009
Maverick Capital, Water Street, Seasons Capital, Alkeon and Galleon Management top Solar investing Hedge Fund List
August 13th, 2009
Last week HedgeTracker.com released its list of Top Solar-Focused hedge funds by percentage of assets. This week we look at the top hedge funds based on their total investment in the solar sector. The only hedge fund to make both of HedgeTracker’s lists is Partner Fund Management. The others on this week’s list include: Maverick Capital, Water Street Capital, Seasons Capital Management, Alkeon Capital Management and Galleon Management.
The top solar hedge fund investor is Lee Ainslie’s Maverick Capital. Mr. Ainslie is a “Tiger Cub,” or a former protégé of Julian Robertson of Tiger Management. As of Q1 ’09, the fund had $180.33mm of its $5,529mm, or 3.26% of its portfolio, invested in solar. However, Maverick Capital is not necessarily a believer in the solar sector overall, as the firm’s solar exposure is entirely concentrated in First Solar Inc. (FSLR) with 1,358,902 shares. Notably, over the first quarter, the firm purchased $85.29mm or 642,756 shares of FSLR.
Water Street Capital, a Jacksonville, Florida-based hedge fund manager, was the next largest solar sector investor with $67.61mm. Over the quarter, Water Street purchased $44mm in FSLR. Its solar holdings include:
First Solar Inc. (FSLR) - $44.03mm, 331,800 shares
Energy Conversion Devices Inc. (ENER) - $18.25mm, 1,375,600 shares
LDK Solar Co. (LDK) - $2.97mm, 468,900 shares
Next on the list is Long/Short equity manager Seasons Capital Management , with a total sector holding of $53.08mm. Like Maverick Capital, the only solar position held by Seasons Capital is First Solar Inc. (FSLR) - $53.08mm, 400,000 shares. The San Francisco-based firm was founded in 2003 by Ravi Kaza and focuses on the technology, media, telecom, consumer, and infrastructure sectors.
Partner Fund Management, another San Francisco-based investor, is fourth on the list, holding $49.49mm in solar equities. The firm’s holdings consist of:
First Solar Inc., (FSLR) - $38.96mm, 293,585 shares, Change $33.03mm
Suntech Power Holdings Co., (STP) - $8.12mm, 694,952 shares, Change $6.95mm
JA Solar Holdings Co., (JASO) - $2.30mm, 683,847 shares, Change $1.49mm
Partner Fund also sold out of $1.71mm of Yingli Green Energy Holding Co. (YGE), $1.05mm of LDK Solar Co., (LDK), and $0.26mm of Evergreen Solar Inc. (ESLR).
Fifth on the list is Takis Sparaggis’ Alkeon Capital Management with a total of $37.88mm invested in the solar sector. The technology-focused hedge fund’s exposure to the solar sector is concentrated in two equities, that of:
First Solar (FSLR) - $32.15mm, 242,301 shares, Change -$2.38mm and
Suntech Power (STP) - $5.73mm, 489,920 shares, Change $5.73mm.
Raj Rajaratnam’s Galleon Management , which also specializes in the technology sector, is the final hedge fund on the list with $36.45mm. Galleon’s solar exposure is spread across 6 solar stocks. Over the first quarter, the firm added to its FSLR, STP, JASO and ENER positions, while it trimmed its exposure to YGG and ESLR. The firm’s holdings were:
First Solar (FSLR) - $25.21mm, 190,000 shares, Change $8.48mm
Suntech Power (STP) - $3.92mm, 335,000 shares, Change $2.98mm
Yingli Green Energy (YGE) - $3.46mm, 575,000 shares, Change -$5.03mm
JA Solar (JASO) - $3.12mm, 925,000 shares, Change $1.08mm
Energy Conversion Devices (ENER) - $0.53mm, 40,000 shares, Change $0.53mm
Evergreen Solar (ESLR) - $0.21mm, 100,000 shares, Change -$0.05mm
During last quarter’s solar report, we noted that Chase Coleman’s Tiger Global Management was the largest buyer of solar stocks over the fourth quarter of 2008, when it purchased approximately $65 million in the sector. Like Maverick’s Lee Ainslie, Mr. Coleman is also a “Tiger Cub” and actually still shares an office with Julian Robertson. This quarter, Mr. Coleman reversed his solar bets, selling completely out of the sector. Tiger Global’s sells included: Yingli Green Energy (YGE) for $12.34mm, LDK Solar (LDK) for $16.01mm, and JA Solar (JASO) for $22.28mm
With the solar sector still in a nascent stage of development, hedge funds continue to actively adjust their sector investment bets. While FSLR seems to be the early favorite, the other emerging companies are still fostering great interest from top hedge fund managers seeking out growth opportunities.
The solar sector used for this analysis, included: First Solar Inc. (FSLR), Suntech Power Holdings (STP), SunPower Corp. (SPWRA & SPWRB), Yingli Green Energy Holding (YGE), LDK Solar Co. Ltd. (LDK), Energy Conversion Devices (ENER), JA Solar Holdings Co. (JASO), Evergreen Solar Inc. (ESLR), Trina Solar Ltd. (TSL), ReneSola Ltd (SOL), Canadian Solar Inc. (CSIQ), Solarfun Power Holdings (SOLF), and Ascent Solar (ASTI).
For more information on the hedge funds and portfolio managers mentioned in this article, please see their “Detailed Investor Profile” below. To see HedgeTracker’s Complete Hedge Fund Directory, click here.
Last week HedgeTracker.com released its list of Top Solar-Focused hedge funds by percentage of assets. This week we look at the top hedge funds based on their total investment in the solar sector. The only hedge fund to make both of HedgeTracker’s lists is Partner Fund Management. The others on this week’s list include: Maverick Capital, Water Street Capital, Seasons Capital Management, Alkeon Capital Management and Galleon Management.
The top solar hedge fund investor is Lee Ainslie’s Maverick Capital. Mr. Ainslie is a “Tiger Cub,” or a former protégé of Julian Robertson of Tiger Management. As of Q1 ’09, the fund had $180.33mm of its $5,529mm, or 3.26% of its portfolio, invested in solar. However, Maverick Capital is not necessarily a believer in the solar sector overall, as the firm’s solar exposure is entirely concentrated in First Solar Inc. (FSLR) with 1,358,902 shares. Notably, over the first quarter, the firm purchased $85.29mm or 642,756 shares of FSLR.
Water Street Capital, a Jacksonville, Florida-based hedge fund manager, was the next largest solar sector investor with $67.61mm. Over the quarter, Water Street purchased $44mm in FSLR. Its solar holdings include:
First Solar Inc. (FSLR) - $44.03mm, 331,800 shares
Energy Conversion Devices Inc. (ENER) - $18.25mm, 1,375,600 shares
LDK Solar Co. (LDK) - $2.97mm, 468,900 shares
Next on the list is Long/Short equity manager Seasons Capital Management , with a total sector holding of $53.08mm. Like Maverick Capital, the only solar position held by Seasons Capital is First Solar Inc. (FSLR) - $53.08mm, 400,000 shares. The San Francisco-based firm was founded in 2003 by Ravi Kaza and focuses on the technology, media, telecom, consumer, and infrastructure sectors.
Partner Fund Management, another San Francisco-based investor, is fourth on the list, holding $49.49mm in solar equities. The firm’s holdings consist of:
First Solar Inc., (FSLR) - $38.96mm, 293,585 shares, Change $33.03mm
Suntech Power Holdings Co., (STP) - $8.12mm, 694,952 shares, Change $6.95mm
JA Solar Holdings Co., (JASO) - $2.30mm, 683,847 shares, Change $1.49mm
Partner Fund also sold out of $1.71mm of Yingli Green Energy Holding Co. (YGE), $1.05mm of LDK Solar Co., (LDK), and $0.26mm of Evergreen Solar Inc. (ESLR).
Fifth on the list is Takis Sparaggis’ Alkeon Capital Management with a total of $37.88mm invested in the solar sector. The technology-focused hedge fund’s exposure to the solar sector is concentrated in two equities, that of:
First Solar (FSLR) - $32.15mm, 242,301 shares, Change -$2.38mm and
Suntech Power (STP) - $5.73mm, 489,920 shares, Change $5.73mm.
Raj Rajaratnam’s Galleon Management , which also specializes in the technology sector, is the final hedge fund on the list with $36.45mm. Galleon’s solar exposure is spread across 6 solar stocks. Over the first quarter, the firm added to its FSLR, STP, JASO and ENER positions, while it trimmed its exposure to YGG and ESLR. The firm’s holdings were:
First Solar (FSLR) - $25.21mm, 190,000 shares, Change $8.48mm
Suntech Power (STP) - $3.92mm, 335,000 shares, Change $2.98mm
Yingli Green Energy (YGE) - $3.46mm, 575,000 shares, Change -$5.03mm
JA Solar (JASO) - $3.12mm, 925,000 shares, Change $1.08mm
Energy Conversion Devices (ENER) - $0.53mm, 40,000 shares, Change $0.53mm
Evergreen Solar (ESLR) - $0.21mm, 100,000 shares, Change -$0.05mm
During last quarter’s solar report, we noted that Chase Coleman’s Tiger Global Management was the largest buyer of solar stocks over the fourth quarter of 2008, when it purchased approximately $65 million in the sector. Like Maverick’s Lee Ainslie, Mr. Coleman is also a “Tiger Cub” and actually still shares an office with Julian Robertson. This quarter, Mr. Coleman reversed his solar bets, selling completely out of the sector. Tiger Global’s sells included: Yingli Green Energy (YGE) for $12.34mm, LDK Solar (LDK) for $16.01mm, and JA Solar (JASO) for $22.28mm
With the solar sector still in a nascent stage of development, hedge funds continue to actively adjust their sector investment bets. While FSLR seems to be the early favorite, the other emerging companies are still fostering great interest from top hedge fund managers seeking out growth opportunities.
The solar sector used for this analysis, included: First Solar Inc. (FSLR), Suntech Power Holdings (STP), SunPower Corp. (SPWRA & SPWRB), Yingli Green Energy Holding (YGE), LDK Solar Co. Ltd. (LDK), Energy Conversion Devices (ENER), JA Solar Holdings Co. (JASO), Evergreen Solar Inc. (ESLR), Trina Solar Ltd. (TSL), ReneSola Ltd (SOL), Canadian Solar Inc. (CSIQ), Solarfun Power Holdings (SOLF), and Ascent Solar (ASTI).
For more information on the hedge funds and portfolio managers mentioned in this article, please see their “Detailed Investor Profile” below. To see HedgeTracker’s Complete Hedge Fund Directory, click here.
8/13/2009
Chinese wind
Written by Marks@Tiburon
Friday, 07 August 2009 00:00
The speed at which China is addressing its voracious appetite for energy and dire environmental issues is not being given enough attention.
While the country has suffered a slow down in economic growth due to the global credit crisis the government has prioritised the development of wind energy as an area for major investment. At the end of 2008 China’s installed wind capacity was 12,200MW. Already, during the first half of 2009, China’s capacity is reported to have increased by over 10,000MW and by the end of 2009 will account for around one third of the world’s installed wind generating capacity and rank second behind the United States, surpassing Germany and Spain. We believe that this could increase by 400% to over 117,000MW by 2013. With China accounting for 33% of global coal consumption and over 70% of electricity generated coming from coal fired generators, there is every incentive to achieve this fourfold increase over the next two years. Some might say it is a necessity.
Every man and his dog buys into the renewable theme. However with targets set for distant dates like 2020 it is often put on the back burner by investors. We believe that the process is accelerating so that the renewable proposition is not just investible, it is timely. It is for this reason that we are launching a new fund, Tiburon Green in Q3.
Friday, 07 August 2009 00:00
The speed at which China is addressing its voracious appetite for energy and dire environmental issues is not being given enough attention.
While the country has suffered a slow down in economic growth due to the global credit crisis the government has prioritised the development of wind energy as an area for major investment. At the end of 2008 China’s installed wind capacity was 12,200MW. Already, during the first half of 2009, China’s capacity is reported to have increased by over 10,000MW and by the end of 2009 will account for around one third of the world’s installed wind generating capacity and rank second behind the United States, surpassing Germany and Spain. We believe that this could increase by 400% to over 117,000MW by 2013. With China accounting for 33% of global coal consumption and over 70% of electricity generated coming from coal fired generators, there is every incentive to achieve this fourfold increase over the next two years. Some might say it is a necessity.
Every man and his dog buys into the renewable theme. However with targets set for distant dates like 2020 it is often put on the back burner by investors. We believe that the process is accelerating so that the renewable proposition is not just investible, it is timely. It is for this reason that we are launching a new fund, Tiburon Green in Q3.
8/05/2009
Ventus Funds reach £50m for investment in UK renewable energy projects
13th July 2009
Low carbon investor Climate Change Capital’s Ventus Funds have raised a further £13.85m of capital for investment in the UK renewable energy sector.
The Ventus Funds have now raised over £50m since their launch in 2005.
The Ventus Funds are specialist venture capital trusts focused exclusively on making investments in the small to medium sized UK onshore renewable energy sector and are the largest group of funds of their kind. Since 2005 the Ventus Funds have invested £30m in over 25 companies, contributing to the delivery over 50MW of new generating capacity.
In November of last year, the Ventus Funds, backed a scheme to enable Belfast’s major landfill site to produce electricity.
Low carbon investor Climate Change Capital’s Ventus Funds have raised a further £13.85m of capital for investment in the UK renewable energy sector.
The Ventus Funds have now raised over £50m since their launch in 2005.
The Ventus Funds are specialist venture capital trusts focused exclusively on making investments in the small to medium sized UK onshore renewable energy sector and are the largest group of funds of their kind. Since 2005 the Ventus Funds have invested £30m in over 25 companies, contributing to the delivery over 50MW of new generating capacity.
In November of last year, the Ventus Funds, backed a scheme to enable Belfast’s major landfill site to produce electricity.
Former UBS Exec Founds Cleantech Investment Bank
July 1, 2009 - FINalternatives
Jeffrey McDermottJeffrey McDermott, formerly of UBS, has launched Greentech Capital Advisors, LLC, billed as a pure-play investment bank and advisory firm dedicated to alternative energy and cleantech companies.
McDermott, a former joint global head of UBS investment banking, has assembled a team from Goldman Sachs, Citi, Morgan Stanley and Barclays to focus on the alternative energy space.
“For [alternative energy and cleantech] companies to thrive, and for America to transition to a cleaner and more energy efficient economy, there is a need for a dedicated team of experienced bankers,” said McDermott. “Alternative energy and cleantech companies need bankers with deep industry knowledge, a wide array of product skills, and relationships with large industrial, power and utility companies who are the ultimate customers, strategic partners and consolidators for these companies.”
Greentech Capital Advisors offers clients services across the project finance, private equity, and mergers and acquisitions markets.
Partners include COO Robert A. Schultz, a former managing director and COO at Morgan Stanley Fund Services; Timothy F. Vincent, head of project finance and a former managing director of infrastructure clients at Goldman Sachs; Michael J. Molnar former lead equity research analyst on the U.S. alternative energy and coal sectors for Goldman Sachs; and Craig J. Wellen, formerly a senior banker at Citi responsible for strategic M&A transactions and capital raisings for numerous North American utilities, infrastructure funds and multinational energy companies.
R. Andrew de Pass, founder and former head of Citi’s Sustainable Development Investments (SDI), joins Greentech Capital Advisors as a senior advisor responsible for developing and leading the firm’s private equity investing business. Olav Junttila, who worked as an investment principal at SDI, has also joined the firm.
Greentech Capital Advisors provides financial advisory services, including buy-side and sell-side M&A, exclusive sale transactions, restructurings, private placements and project finance advisory to companies engaged in alternative energy; energy efficiency, transmission and distribution infrastructure; sustainable materials and products; waste management; recycling and water efficiency.
Jeffrey McDermottJeffrey McDermott, formerly of UBS, has launched Greentech Capital Advisors, LLC, billed as a pure-play investment bank and advisory firm dedicated to alternative energy and cleantech companies.
McDermott, a former joint global head of UBS investment banking, has assembled a team from Goldman Sachs, Citi, Morgan Stanley and Barclays to focus on the alternative energy space.
“For [alternative energy and cleantech] companies to thrive, and for America to transition to a cleaner and more energy efficient economy, there is a need for a dedicated team of experienced bankers,” said McDermott. “Alternative energy and cleantech companies need bankers with deep industry knowledge, a wide array of product skills, and relationships with large industrial, power and utility companies who are the ultimate customers, strategic partners and consolidators for these companies.”
Greentech Capital Advisors offers clients services across the project finance, private equity, and mergers and acquisitions markets.
Partners include COO Robert A. Schultz, a former managing director and COO at Morgan Stanley Fund Services; Timothy F. Vincent, head of project finance and a former managing director of infrastructure clients at Goldman Sachs; Michael J. Molnar former lead equity research analyst on the U.S. alternative energy and coal sectors for Goldman Sachs; and Craig J. Wellen, formerly a senior banker at Citi responsible for strategic M&A transactions and capital raisings for numerous North American utilities, infrastructure funds and multinational energy companies.
R. Andrew de Pass, founder and former head of Citi’s Sustainable Development Investments (SDI), joins Greentech Capital Advisors as a senior advisor responsible for developing and leading the firm’s private equity investing business. Olav Junttila, who worked as an investment principal at SDI, has also joined the firm.
Greentech Capital Advisors provides financial advisory services, including buy-side and sell-side M&A, exclusive sale transactions, restructurings, private placements and project finance advisory to companies engaged in alternative energy; energy efficiency, transmission and distribution infrastructure; sustainable materials and products; waste management; recycling and water efficiency.
Leuthold Launches Cleantech Mutual Fund
July 29, 2009 _ FINalternatives
Minneapolis, Minn.-based asset management firm Leuthold Weeden Capital Management has recently unveiled a mutual fund that will focus on the rapidly growing clean technology sector.
The new offering, the Leuthold Global Clean Technology Fund, will invest in publicly traded clean technology companies, both in the U.S. and abroad, with the aim of holding stocks for a year or longer.
“Most funds out there are looking at recent technologies. We are looking at proven strategies that have the potential for growth,” says Eric Bjorgen, who co-manages the fund alongside Steve Leuthold, chief investment officer of the firm.
Cleantech industry expert David Kurzman, who recently joined the firm to provide analytical support for the fund, says there is a “perfect storm” of events happening now that makes this area of investing extremely attractive.
“First, you have political will, not only in the U.S. with the Obama administration looking to put north of $150 billion over the next decade into renewables and clean technologies, but you also have political will coming from multiple other countries. Second, there are a number of really attractive and talented managers that are coming into the industry…And third, the companies themselves have commercially viable products that are generating profits,” Kurzman says.
According to Bjorgen, the fund will focus on four clean technology groups: alternative energy, resource conservation, clean water, and clean environment.
The team is being rounded out by analyst Jun Zhu, who has been with the firm for over a year and has a strong background in both fundamental and quantitative analysis.
The Leuthold Global Clean Technology Fund offers both a Retail Share Class (LGCTX) and an Institutional Share Class (LGCIX).
Minneapolis, Minn.-based asset management firm Leuthold Weeden Capital Management has recently unveiled a mutual fund that will focus on the rapidly growing clean technology sector.
The new offering, the Leuthold Global Clean Technology Fund, will invest in publicly traded clean technology companies, both in the U.S. and abroad, with the aim of holding stocks for a year or longer.
“Most funds out there are looking at recent technologies. We are looking at proven strategies that have the potential for growth,” says Eric Bjorgen, who co-manages the fund alongside Steve Leuthold, chief investment officer of the firm.
Cleantech industry expert David Kurzman, who recently joined the firm to provide analytical support for the fund, says there is a “perfect storm” of events happening now that makes this area of investing extremely attractive.
“First, you have political will, not only in the U.S. with the Obama administration looking to put north of $150 billion over the next decade into renewables and clean technologies, but you also have political will coming from multiple other countries. Second, there are a number of really attractive and talented managers that are coming into the industry…And third, the companies themselves have commercially viable products that are generating profits,” Kurzman says.
According to Bjorgen, the fund will focus on four clean technology groups: alternative energy, resource conservation, clean water, and clean environment.
The team is being rounded out by analyst Jun Zhu, who has been with the firm for over a year and has a strong background in both fundamental and quantitative analysis.
The Leuthold Global Clean Technology Fund offers both a Retail Share Class (LGCTX) and an Institutional Share Class (LGCIX).
8/04/2009
Riding a green tide: Matthew Goldstein
Mon Aug 3, 2009 4:14pm EDT
-- Matthew Goldstein is a Reuters columnist. The views expressed are his own --
By Matthew Goldstein
NEW YORK (Reuters) - PetroAlgae (PALG.OB: Quote, Profile, Research, Stock Buzz) is one of those many clean-tech companies that seem to burn through cash faster than a Hummer goes through a gallon of gas. Yet something curious is going on with shares of this Melbourne, Florida-based company, which is hoping to make money from turning algae into oil.
Over the past month, the stock price of PetroAlgae has rocketed from $8 to as high as $32.75 on ultra-thin trading of the shares (as of late Monday it had fallen back to around $10).
PetroAlgae boasts a rather healthy $1 billion market value -- after being as high as $3.4 billion earlier Monday -- even though it has no revenues, a $34 million accumulated deficit and its auditor isn't sure the company can continue as a going concern.
There may be a plausible explanation for PetroAlgae's surprising surge. Last month, Exxon Mobil (XOM.N: Quote, Profile, Research, Stock Buzz) announced that it would spend $600 million to study the feasibility of algae-based fuels. There's no indication PetroAlgae will get any of those research dollars, but that's never stopped investors from wishing.
But the real winners here are David Grin and Eugene Grin, hedge fund managers who are longtime investors in cash-starved, small-cap companies. A group of funds managed by the brothers, including the $700 million Valens Capital Management series of hedge funds, effectively own a 96 percent equity stake in PetroAlgae.
The brothers Grin sank their teeth deep into PetroAlgae last December. In a series of transactions, a company controlled by Valens and the other funds paid $350,000 for 100 million shares of PetroAlgae, regulatory filings show. Then the Valens funds pumped an additional $10 million into PetroAlgae -- a cash infusion that accounted for nearly all the assets on the biotech company's balance sheet at the end of 2008.
Valens' investment in PetroAlgae represents nearly a quarter of the hedge funds' equity, say investors familiar with the fund. So the Valens funds, which were up a modest 4 percent in the first half of the year, should get a big bounce in July from the run-up in PetroAlgae shares.
Still, it's hard to see how Valens investors will ever truly profit from an Exxon-induced green wave of enthusiasm for algae-based fuels.
With the Grins' funds controlling all but a small sliver of PetroAlgae shares, the stock seldom trades. Any attempt by Valens and the other related hedge funds to try to take some profits by selling shares would quickly take the air out of this bubble.
And with PetroAlgae burning through $5.8 million in cash in the first quarter, about half the $10 million it received from Valens is gone. At the end of the first quarter, PetroAlgae reported having $5.6 million in assets. It had $11.6 million at the end of 2008.
So it's not clear what the Grins' longtime game plan is for this tiny cash-hungry company. An attorney for the hedge funds had little to say except to note that the Grins provide "shareholders and auditors with complete transparency and updates on the PetroAlgae investment."
Unless PetroAlgae can come to market soon with a viable technology for turning algae into fuel, it appears as if Valens investors may find themselves stranded on the rocks.
(Editing by Martin Langfield)
-- Matthew Goldstein is a Reuters columnist. The views expressed are his own --
By Matthew Goldstein
NEW YORK (Reuters) - PetroAlgae (PALG.OB: Quote, Profile, Research, Stock Buzz) is one of those many clean-tech companies that seem to burn through cash faster than a Hummer goes through a gallon of gas. Yet something curious is going on with shares of this Melbourne, Florida-based company, which is hoping to make money from turning algae into oil.
Over the past month, the stock price of PetroAlgae has rocketed from $8 to as high as $32.75 on ultra-thin trading of the shares (as of late Monday it had fallen back to around $10).
PetroAlgae boasts a rather healthy $1 billion market value -- after being as high as $3.4 billion earlier Monday -- even though it has no revenues, a $34 million accumulated deficit and its auditor isn't sure the company can continue as a going concern.
There may be a plausible explanation for PetroAlgae's surprising surge. Last month, Exxon Mobil (XOM.N: Quote, Profile, Research, Stock Buzz) announced that it would spend $600 million to study the feasibility of algae-based fuels. There's no indication PetroAlgae will get any of those research dollars, but that's never stopped investors from wishing.
But the real winners here are David Grin and Eugene Grin, hedge fund managers who are longtime investors in cash-starved, small-cap companies. A group of funds managed by the brothers, including the $700 million Valens Capital Management series of hedge funds, effectively own a 96 percent equity stake in PetroAlgae.
The brothers Grin sank their teeth deep into PetroAlgae last December. In a series of transactions, a company controlled by Valens and the other funds paid $350,000 for 100 million shares of PetroAlgae, regulatory filings show. Then the Valens funds pumped an additional $10 million into PetroAlgae -- a cash infusion that accounted for nearly all the assets on the biotech company's balance sheet at the end of 2008.
Valens' investment in PetroAlgae represents nearly a quarter of the hedge funds' equity, say investors familiar with the fund. So the Valens funds, which were up a modest 4 percent in the first half of the year, should get a big bounce in July from the run-up in PetroAlgae shares.
Still, it's hard to see how Valens investors will ever truly profit from an Exxon-induced green wave of enthusiasm for algae-based fuels.
With the Grins' funds controlling all but a small sliver of PetroAlgae shares, the stock seldom trades. Any attempt by Valens and the other related hedge funds to try to take some profits by selling shares would quickly take the air out of this bubble.
And with PetroAlgae burning through $5.8 million in cash in the first quarter, about half the $10 million it received from Valens is gone. At the end of the first quarter, PetroAlgae reported having $5.6 million in assets. It had $11.6 million at the end of 2008.
So it's not clear what the Grins' longtime game plan is for this tiny cash-hungry company. An attorney for the hedge funds had little to say except to note that the Grins provide "shareholders and auditors with complete transparency and updates on the PetroAlgae investment."
Unless PetroAlgae can come to market soon with a viable technology for turning algae into fuel, it appears as if Valens investors may find themselves stranded on the rocks.
(Editing by Martin Langfield)
Commodity Hedge Funds Pick Up $1B
August 3, 2009 FinAlternatives
Commodity hedge funds did far better than most of their peers last year, and investors have rewarded them.
Even though commodities hedge funds lost 2.3% in the first half, hedge funds investing in the strategy took in nearly $1 billion in the second quarter, Hedge Fund Research reports. Commodities hedge funds now manage $11 billion, up 8.9% from the end of the first quarter, and nearly as much as the $11.1 billion they managed at the beginning of the year.
HFR said there were about 150 commodity hedge funds last month.
Commodity hedge funds did far better than most of their peers last year, and investors have rewarded them.
Even though commodities hedge funds lost 2.3% in the first half, hedge funds investing in the strategy took in nearly $1 billion in the second quarter, Hedge Fund Research reports. Commodities hedge funds now manage $11 billion, up 8.9% from the end of the first quarter, and nearly as much as the $11.1 billion they managed at the beginning of the year.
HFR said there were about 150 commodity hedge funds last month.
8/03/2009
Roubini Says Commodity Prices May Rise in 2010
By Rebecca Keenan and Jason Scott
Aug. 3 (Bloomberg) -- Commodity prices may extend their rally in 2010 as the global recession abates, said Nouriel Roubini, the New York University economist who predicted the financial crisis.
“As the global economy goes toward growth as opposed to a recession, you are going to see further increases in commodity prices especially next year,” Roubini said today at the Diggers and Dealers mining conference in Kalgoorlie, Western Australia. “There is now potentially light at the end of the tunnel.”
Roubini, chairman of Roubini Global Economics and a professor at NYU’s Stern School of Business, joins former Federal Reserve Chairman Alan Greenspan in seeing signs of recovery. Commodity prices gained the most in more than four months on July 30 as investors speculated that the worst of the global recession has passed and consumption of crops, metals and fuel will rebound.
“The things he was saying provide good indicators for our business,” Martin McDermott, a manager for metals project development at SNC-Lavalin Group Inc., Canada’s biggest engineering and construction company, said at the conference. “The commodities that we’re involved with, being copper, nickel, gold, iron ore, all seem to have positive signs and we hope to take advantage of that.”
Greenspan said yesterday the most severe recession in the U.S. in at least five decades may be ending and growth may resume at a rate faster than most economists foresee. Oil has jumped 56 percent in 2009 and copper has surged 86 percent.
China Growth Target
Roubini predicted on July 23 that the global economy will begin recovering near the end of 2009, before possibly dropping back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth.
Economic growth in China, the world’s biggest metals consumer, accelerated in the second quarter, gaining 7.9 percent from a year earlier. China, the biggest contributor to global growth, overtook Japan as the world’s second-largest stock market by value on July 16 after the nation’s 4 trillion yuan ($585 billion) stimulus package spurred record lending and boosted prices of shares and commodities.
China will meet its target of 8 percent growth in gross domestic product this year, Roubini said. Manufacturing in China climbed for a fifth month in July as stimulus spending and subsidies for consumer purchases countered a collapse in exports, and helped companies from chipmaker Semiconductor Manufacturing International Corp. to automaker General Motors Corp. as well as mining companies such as BHP Billiton Ltd. and Rio Tinto Group.
China’s official Purchasing Managers’ Index rose to a seasonally adjusted 53.3 in July from 53.2 in June. A reading above 50 indicates an expansion. The manufacturing index has climbed from a record low of 38.8 in November.
Aussie Dollar, Aluminum
A rise in commodity prices may help the Australian dollar, Roubini said today, adding he is “bullish” on the currency. Countries including Australia, New Zealand and Canada have so- called commodity currencies because raw materials generate more than 50 percent of their export revenues.
The Australian dollar today rose to the highest since September before retail sales and house price data tomorrow that may add to evidence the nation’s economy will rebound faster than the central bank forecast six months ago.
The price of aluminum, used in beverage cans and airplane parts, has declined by a third in the past year as the global recession crimped demand. A recovery in demand may be offset by the “huge amount of excess capacity,” which could be a risk to the price, Roubini said.
The Reuters/Jefferies CRB Index of 19 commodities has risen 12 percent this year. It jumped 3.9 percent on July 30 to 253.14, the biggest gain since March 19.
Slow Recovery
“That recovery will continue slowly, slowly over time,” Roubini said today. The global economy may contract 2 percent this year and swing to growth of 2.3 percent next year, he said.
Vale SA, the world’s biggest iron ore producer, said demand for metals is starting to recover and it will begin boosting output. Vale Chief Financial Officer Fabio Barbosa said on July 30 that “the worst is over”.
The price of oil may rise more than other commodities because of an expected rebound in demand, Roubini said separately in an interview with Bloomberg News. It may average between $70 and $75 a barrel next year, he said.
Oil Prices
Crude oil traded above $70 a barrel today for the first time in a month on speculation fuel demand will increase, amid signs the global economy is recovering from recession.
The U.S. economy, the world’s biggest, is likely to grow about 1 percent in the next two years, less than the 3 percent “trend,” Roubini said last month. President Barack Obama said on July 30 the U.S. may be seeing the beginning of the end of the recession.
In July 2006 Roubini predicted the financial crisis. In February of last year he forecast a “catastrophic” meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks with mortgage holdings and a “sharp drop” in equities. Since then, Bear Stearns Cos. was forced into a sale and Lehman Brothers Holdings Inc. went bankrupt, prompting banks to hoard cash and depriving businesses and households of access to capital.
Aug. 3 (Bloomberg) -- Commodity prices may extend their rally in 2010 as the global recession abates, said Nouriel Roubini, the New York University economist who predicted the financial crisis.
“As the global economy goes toward growth as opposed to a recession, you are going to see further increases in commodity prices especially next year,” Roubini said today at the Diggers and Dealers mining conference in Kalgoorlie, Western Australia. “There is now potentially light at the end of the tunnel.”
Roubini, chairman of Roubini Global Economics and a professor at NYU’s Stern School of Business, joins former Federal Reserve Chairman Alan Greenspan in seeing signs of recovery. Commodity prices gained the most in more than four months on July 30 as investors speculated that the worst of the global recession has passed and consumption of crops, metals and fuel will rebound.
“The things he was saying provide good indicators for our business,” Martin McDermott, a manager for metals project development at SNC-Lavalin Group Inc., Canada’s biggest engineering and construction company, said at the conference. “The commodities that we’re involved with, being copper, nickel, gold, iron ore, all seem to have positive signs and we hope to take advantage of that.”
Greenspan said yesterday the most severe recession in the U.S. in at least five decades may be ending and growth may resume at a rate faster than most economists foresee. Oil has jumped 56 percent in 2009 and copper has surged 86 percent.
China Growth Target
Roubini predicted on July 23 that the global economy will begin recovering near the end of 2009, before possibly dropping back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth.
Economic growth in China, the world’s biggest metals consumer, accelerated in the second quarter, gaining 7.9 percent from a year earlier. China, the biggest contributor to global growth, overtook Japan as the world’s second-largest stock market by value on July 16 after the nation’s 4 trillion yuan ($585 billion) stimulus package spurred record lending and boosted prices of shares and commodities.
China will meet its target of 8 percent growth in gross domestic product this year, Roubini said. Manufacturing in China climbed for a fifth month in July as stimulus spending and subsidies for consumer purchases countered a collapse in exports, and helped companies from chipmaker Semiconductor Manufacturing International Corp. to automaker General Motors Corp. as well as mining companies such as BHP Billiton Ltd. and Rio Tinto Group.
China’s official Purchasing Managers’ Index rose to a seasonally adjusted 53.3 in July from 53.2 in June. A reading above 50 indicates an expansion. The manufacturing index has climbed from a record low of 38.8 in November.
Aussie Dollar, Aluminum
A rise in commodity prices may help the Australian dollar, Roubini said today, adding he is “bullish” on the currency. Countries including Australia, New Zealand and Canada have so- called commodity currencies because raw materials generate more than 50 percent of their export revenues.
The Australian dollar today rose to the highest since September before retail sales and house price data tomorrow that may add to evidence the nation’s economy will rebound faster than the central bank forecast six months ago.
The price of aluminum, used in beverage cans and airplane parts, has declined by a third in the past year as the global recession crimped demand. A recovery in demand may be offset by the “huge amount of excess capacity,” which could be a risk to the price, Roubini said.
The Reuters/Jefferies CRB Index of 19 commodities has risen 12 percent this year. It jumped 3.9 percent on July 30 to 253.14, the biggest gain since March 19.
Slow Recovery
“That recovery will continue slowly, slowly over time,” Roubini said today. The global economy may contract 2 percent this year and swing to growth of 2.3 percent next year, he said.
Vale SA, the world’s biggest iron ore producer, said demand for metals is starting to recover and it will begin boosting output. Vale Chief Financial Officer Fabio Barbosa said on July 30 that “the worst is over”.
The price of oil may rise more than other commodities because of an expected rebound in demand, Roubini said separately in an interview with Bloomberg News. It may average between $70 and $75 a barrel next year, he said.
Oil Prices
Crude oil traded above $70 a barrel today for the first time in a month on speculation fuel demand will increase, amid signs the global economy is recovering from recession.
The U.S. economy, the world’s biggest, is likely to grow about 1 percent in the next two years, less than the 3 percent “trend,” Roubini said last month. President Barack Obama said on July 30 the U.S. may be seeing the beginning of the end of the recession.
In July 2006 Roubini predicted the financial crisis. In February of last year he forecast a “catastrophic” meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks with mortgage holdings and a “sharp drop” in equities. Since then, Bear Stearns Cos. was forced into a sale and Lehman Brothers Holdings Inc. went bankrupt, prompting banks to hoard cash and depriving businesses and households of access to capital.
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