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LDK Solar Shares Plunged: What You Need to Know

By Travis Hoium – Updated Apr 6, 2017 at 10:00AM

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Is this meaningful? Or just another movement?

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: LDK Solar (NYSE: LDK) shares dropped 13% in trading today on rising Chinese interest rate news and concerns about U.S. complaints that China is subsidizing solar.

So What: There has been uncertainty about U.S. complaints that the Chinese government is subsidizing the solar market this week. Today, China also announced a 0.25% increase in interest rates, bringing about rumors that China will allow its currency to rise versus the dollar with the G-20 Summit approaching. This would make Chinese solar panels more expensive abroad and thus bring lower demand.

Now What: LDK Solar led solar shares down today, but I wouldn't panic at this sell-off in the sector. The solar market has risen recently on increasing confidence that 2011 will bring strong demand, so I see today's sell-off as a correction, knowing the volatility in solar. I don't see today's panic as a reason to change your investing thesis in solar. The correction may take a few more days, but after the G-20 Summit, we should have more clarity from China on all of these issues. You may want to save your buy orders until then.

Interested in more info on LDK Solar? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his Motley Fool CAPS picks at TMFFlushDraw.

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