Green firms lose uplift

IT'S harder to save the world when you've been bought back to earth with a thud.

By InvestSMART · 13 Jul 2011

By InvestSMART ·
13 Jul 2011

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IT'S harder to save the world when you've been bought back to earth with a thud.

That's the reality facing a cluster of renewable energy and carbon-abatement stocks today, after their stint as market darlings was savagely cut short by bearish investors yesterday.

Tree growers CO2 Group was among those cut down to size, its shares losing 3? or more than 11 per cent of their value to close at 23.5?.

That result more than erased the 8 per cent gains made on Monday, but left the company still ahead over the past week.

The warm glow of the carbon tax announcement also began to fade for geothermal aspirants like Geodynamics.

After three successive trading days lifted the value of its shares by 16 per cent, 19 per cent, then 25 per cent, Geodynamics went cold yesterday. A slump of more than 14 per cent took its price from 42? back to 36?.

Fellow geothermal stock Petratherm also got the cold shoulder from the market, falling 2? or nearly 11 per cent to close at 17?.

The falls came on a bad day for most stocks, with the S&P/ASX 200 Index dropping 1.9 per cent.

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Frequently Asked Questions about this Article…

What triggered the recent sell-off in renewable energy and carbon-abatement stocks?

The article says bearish investors cut short a recent rally in renewable and carbon-abatement stocks. The pullback followed fading enthusiasm after a carbon tax announcement and came on a broadly weak trading day, with the S&P/ASX 200 falling 1.9%.

How badly did CO2 Group shares fall in the market pullback?

CO2 Group shares lost more than 11% in the sell-off and closed at 23.5 (as reported in the article). That drop erased an 8% gain from the prior trading day but left the company still ahead over the past week.

What happened to Geodynamics’ share price after its recent run-up?

Geodynamics had three successive trading-day gains of 16%, 19% and 25% before cooling off. The stock then slumped by more than 14%, taking its price from 42 back to 36 (figures reported in the article).

Why did Petratherm shares fall and by how much?

Petratherm received a ‘cold shoulder’ from the market in the same sell-off, falling nearly 11% to close at 17 (as noted in the article). The decline was part of the sector-wide pullback that day.

Did the broader market downturn affect green stocks in this episode?

Yes. The sector’s falls coincided with a weak market session overall—the S&P/ASX 200 Index dropped 1.9%—so the decline in green and geothermal stocks took place against a negative market backdrop.

Were any of the green stocks still up for the week despite the sell-off?

According to the article, CO2 Group remained ahead over the past week despite the one-day drop. For other stocks like Geodynamics and Petratherm, the article highlights sharp short-term moves but does not state their net weekly positions.

How did the carbon tax announcement influence investor sentiment in renewable stocks?

The article describes an initial ‘warm glow’ from the carbon tax announcement that began to fade, contributing to profit-taking and weaker sentiment in geothermal and carbon-abatement names as investors reassessed positions.

What should everyday investors take away from these short-term swings in renewable and geothermal shares?

The article illustrates that renewable and carbon-abatement stocks can be volatile and sensitive to policy news and overall market sentiment. Short-term rallies can be quickly reversed by bearish trading, so paying attention to catalysts like policy developments and broad market moves is important when watching these sectors.