Expecting a series of interest rate cuts from the Federal Reserve to rejuvenate the green transition is misguided, according to a report by Bloomberg citing Barry Norris, Founder and Chief Investment Officer of UK hedge fund Argonaut Capital Partners.
“Over the past few years, proponents of the energy transition have attributed the industry’s struggles solely to high interest rates,” said Norris in an interview. “Now that interest rates are declining, you’d think market sentiment would improve. But instead, insiders are going back to governments, asking for even more subsidies.”
Norris’s perspective contrasts sharply with the prevailing optimism seen across Wall Street, where firms like Citigroup and Goldman Sachs are declaring a turning point for green stocks, highlighting success stories such as wind-farm operator Ørsted, up 20% this year, and Siemens Energy, which has soared 174%.
However, not all green stocks are on the up. Vestas Wind Systems, for example, has dropped 30% this year as higher maintenance costs for existing turbines hit profits, while European wind turbine manufacturers, including Vestas, are also losing ground to competitors in India’s growing wind market, according to BloombergNEF.
The S&P Global Clean Energy Index meanwhile, has declined about 6% since the start of the year, lagging behind the S&P 500’s more than 20% gain during the same period, while European ESG-focused equity funds tracked by Bloomberg have posted an average return of just 15% so far this year. Since its high in early 2021, the S&P Clean Energy Index has lost more than half of its value.
Norris remains fundamentally skeptical of the green transition and the very existence of many green companies. “If capitalism had been left to its own devices, most of these firms would never have been born,” Norris argues.
