Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of JinkoSolar Holding Co., Ltd. (NYSE:JKS) fell nearly 10% Thursday following at least two cautious reports on the broader solar sector.
So what: JinkoSolar certainly wasn't the only solar stock falling today. Yingli Green Energy (NYSE:YGE), for example, fell nearly 6%, while SunPower (NASDAQ:SPWR) and Canadian Solar (NASDAQ:CSIQ) closed down 4% and 6%, respectively.
The culprit appears to be a number of negative reports on the solar sector, including one from Bloomberg stating the Indian government found evidence that more than 20 foreign companies had sold solar equipment in India for as little as half the cost as in their home markets, and undercut local prices by as much as a third. As a result, India is mulling whether to impose tarriffs on solar imports from the U.S., China, Taiwan, and Malaysia.
In addition, a report from analysts at Deutsche Bank today questions whether existing targets for Chinese installation forecasts were far too optimistic because there isn't enough available financing for the projects. Specifically, the report says, demand in China has declined from around 6 GW in Q4 to 1 GW in the most-recent quarter, and should only rebound in the second quarter to around 3 GW to 4 GW. Altogether in 2014, Deutsche cautions solar demand in China might potentially only be in the 8 GW range.
Now what: That's a big reduction from the revised 11.5 GW forecast two weeks ago by analysts at Credit Suisse, so it's certainly possible one or the other could be off base. However, I still believe the trends in solar so far this year are undeniably positive, and demand over the long term appears to remain intact. As a result, I don't think investors who liked the solar sector before should be running for the hills today.
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