Hedge funds, including London-based Clean Energy Transition, are eyeing buying opportunities after Donald Trump’s victory in the US presidential election sparked a sharp sell-off in stocks across the ESG investing space, according to a report by Bloomberg.
Renewable energy stocks and clean energy indices took a significant hit as the market anticipated shifts in US policy with the WilderHill Clean Energy Index dropping 6.7% —its biggest loss since early August. Solar firms were particularly impacted, with Sunnova Energy down 52%, First Solar falling nearly 20%, and Sunrun shedding as much as 30%.
The report cites Clean Energy Transition CEO Per Lekander as saying that the current selloff is overdone. “The market is straight selling renewables,” he noted, adding that while the initial reaction wasn’t entirely unfounded, it was indiscriminate. “This is a buying opportunity. Give it a week and then buy,” he suggested.
Some analysts argue that the assumption driving the selloff — that Trump will dismantle key Biden-era climate initiatives — is likely overstated. One prominent target of concern is the Inflation Reduction Act (IRA), which introduced substantial tax incentives for clean energy investments. However, as Lekander points out, many Republican-led states that have benefited from the IRA’s job creation might resist a full repeal.
Analysts at JPMorgan support this view, suggesting that changes to the IRA are more likely to be gradual rather than drastic. They highlighted that provisions aimed at US-based production and manufacturing are particularly likely to remain intact.
This viewpoint resonates with other industry leaders tracking the sharp declines in ESG-related stocks. Allianz Global Investors’ Greg Hirt believes that, while Trump’s policies might slow progress, a sweeping rollback is unlikely. “We expect only moderate impact,” Hirt said.
Investment firm Robeco is already looking for opportunities within the solar sector. “US solar is very attractively valued,” said Michiel Plakman, Robeco’s co-head of global equity. “Investors need to reassess and identify undervalued assets.” Robeco may also consider increasing its natural gas holdings, expecting a reversal of Biden-era LNG export restrictions.
Trillium Asset Management’s CEO Matt Patsky meanwhile, echoed a cautiously optimistic outlook, labelling the drop in green stocks as a possible overreaction. While acknowledging the setback, he believes the long-term trend toward renewable energy remains intact. “The energy transition is irrefutable,” he said.
Tesla, notably, may emerge relatively unscathed due to Trump’s relationship with CEO Elon Musk, making it unlikely that the new administration would significantly disrupt the EV giant’s growth.
