China CleanTech Index under-performs peers in June

The China CleanTech Index has reported an 8.1 per cent loss in June, a worse performance than all its benchmarks and it was down 10.8 per cent for the year. Only days after Bloomberg New Energy Finance reported  that China was driving global growth in the clean energy sector with a 92 per cent surge in investment in the second quarter of 2012 over the first quarter, the Index showed that investor confidence is still shaky.

Bloomberg did point out that it was primarily project financing boosting clean tech investment rather than new business by manufacturers, which remain under pressure.

The only good news was that although the China CleanTech Index fell 10.5 per cent over the second quater, it did better than the Wilder Hill New Energy Global Innovation Index (NEX) which fell 15.5 percent and the Cleantech Index (CTIUS) which made a loss of 11.2 percent. Again, in spite of poor performance, the Chinese companies have proved more robust than there global counterparts.

However when comparing the China CleanTech Index with broader equity benchmarks, does not look at all good. Over the second quarter the Shanghai Composite index reported fell 1.6 per cent while the MSCI was down 5.8 per cent.

The performance of the Index reflects the facts that China's wind and solar manufacturing sectors are suffering. Over the first half of 2012,  the China Wind Index fell 27.1 per cent and the China Solar Index 26.3 per cent. It was a similar story for the month of June with China Wind Index leading the component indices, down by 18 per cent.

The best constituent index performers for the first half of the year were the China Storage Index – up 20.6 per cent - and the China Hydro Index creeping up by 5.5 per cent. For those fortunate enough to have seen which way the wind was blowing, there were 11 companies that gained more than 25 per cent on their share price (see box).

The index's China CleanTech 20, based on market capitalization, fell even more than the composite index, down by 9.3 per cent in June. Interestingly the CleanTech 20 is now dominated by water companies and the solar industry only has two companies remaining in it – GCL-Poly Energy Holdings and Shanghai Chaori Solar Energy Science. Last year it was solar companies that dominated the index.

The China CleanTech Index is made up of eight sub-indices; China Efficiency Index, Environment, Solar, Wind, Water, Storage, Hydro and Waste.