Why Chinese Solar Stocks Jumped Today
Sep 30th 2013 5:23PM
Updated Sep 30th 2013 5:24PM
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 Suntech Power and LDK Solar have jumped 19% and 26% respectively, after investors learned of a tax break.
So what: China's Ministry of Finance announced it will give manufacturers of solar products a 50% refund on value-added taxes to help the industry. This would lower the cost to manufacture a solar module and should help with anemic margins for manufacturers.
Now what: The Chinese solar industry as a whole is up today with Suntech and LDK leading the way, a curious move by these stocks. Both companies have defaulted on debt payments and are going to have to restructure operations. Shareholders won't likely be left with much in a restructuring considering the billions in debt both companies have, which means I wouldn't buy the move of either today.
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The article Why Chinese Solar Stocks Jumped Today originally appeared on Fool.com.Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.