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Why Chinese Solar Stocks Jumped Today

By Travis Hoium - Apr 23, 2013 at 4:45PM

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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: Shares of Chinese solar manufacturers Yingli Green Energy (NYSE: YGE) and Trina Solar (NYSE: TSL) both jumped 10% after the latter announced a new loan.

So what: The China Development Bank is giving Yingli Green Energy a $110 million one-year loan and a $55 million three-year loan to use for working capital and raw material needs. This adds to $2.5 billion of debt already on the balance sheet and doesn't bring the company any closer to profitability.  

Now what: Chinese state-run banks are now in position to pick winners and losers in the solar industry. The reason Yingli and Trina jumped today is that investors are speculating that they'll be able to outlast others in the industry. I'm still not buying this pop, because both companies are losing money, and adding more debt doesn't help their problems.

Interested in more info on Yingli Green Energy? Add it to your watchlist by clicking here.

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