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Chinese hedge fund manager to focus on green energy amid wider China stock rebound

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Guangdong Zhengyuan Private Fund Investment Management Co’s Liao Maolin believes that the worst is over for China stocks and a rebound is looming large, according to a report by The Financial Post.

Having invested heavily in the country’s sinking stock in March, the hedge fund manager is now focused on betting on downstream green energy companies and is raising money to invest in solar and wind power plants.

And the strategy is already paying off with the firm’s holdings in companies focused on photovoltaic technology — devices that convert light into electricity — having rebounded as predicted, extending the Zhengyuan No 1 fund’s returns to 52 times since its inception six years ago.

The fund, which manages about RMB1.5 billion yuan, jumped 103% as of 22 July from its low on 26 April, according to Shenzhen PaiPaiWang Investment & Management Co.

China’s policy makers shave been stepping up their efforts to bolster growth with the government doling out support measures to revive a stuttering economy – the country’s growth slumped to 0.4% in the second quarter, the lowest since the pandemic first hit two years ago. The benchmark CSI 300 Index has fallen nearly 17% this year, but both coal-fired electricity power plants and green energy have suffered steeper declines due to a jump in the price of raw materials. And that’s where Maolin sees the biggest new opportunity. 

Maolin believes that prices for raw materials including coal and polysilicon, the ultra-conductive metal used to make solar panels, will start falling within a year as supply exceeds demand, while electricity prices could trend higher as China’s campaign to curb emissions drives up energy costs over the longer term.

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