China will be in the lead in reducing fossil fuel use, which is a need for its own strategy, not because of who asked them to do so. html On the evening of November 8, a newly launched structural monetary policy tool by the People's Bank of China will provide low-cost funds for domestic financial institutions to support them in issuing loans to enterprises that will help China achieve carbon emission reduction goals.
The People's Bank of China said that this move is to "support the development of key areas such as clean energy, energy conservation and environmental protection, carbon emission reduction technology through steady and orderly and precise direct access, and leverage more social funds to promote carbon emission reduction."
According to the announcement released on the website of the central bank, the issuance of carbon emission reduction support tools is tentatively national financial institutions. People's Bank of China uses the direct delivery mechanism of "loan first and borrow" to provide financial support for qualified carbon emission reduction loans issued by financial institutions to relevant enterprises in key areas of carbon emission reduction. The interest rate is 1.75%, the term is 1 year and can be extended twice. On the premise of independent decision-making and self-supporting risks, financial institutions provide carbon emission reduction loans to all types of enterprises in key areas of carbon emission reduction equally. The loan interest rate should be roughly the same as the loan market quotation rate (LPR) for the same period. htmlOn November 9, the new energy-related sectors rose with the trend, but the reaction was not severe. As of the close of November 9, Tianhong CSI Photovoltaic Industry Index A (011102) rose 0.83%, and Huitianfu CSI New Energy Vehicle Industry Index A (501057) rose 0.56%. Longi Green Energy Technology Co., Ltd. rose 1.56%, Sunshine Power rose 1.4%, and Sanxia Energy rose 2.44%.
Before the introduction of favorable policies, the new energy theme had become the investment hotspot of A shares in the third quarter. According to the recent third quarter report of public funds, among the 25 major stocks that are held by public funds, 9 companies belong to the new energy industry, namely CATL , Longi Green Energy Technology Co., Ltd., Sungrow Power Supply, Tianci Materials, Enjie Co., Ltd. , Yiyi Lithium Energy , BYD , Sanxia Energy, and Ganfeng Lithium Industry . htmlOn November 9, member of the Chief Economist Committee of the China Securities Association and chief economist of Qianhai Open Source Fund , Yang Delong , told the Chinese version of Barron's magazine that the goal of achieving carbon neutrality is my country's established national policy, but the path is not easy. It is necessary to vigorously develop photovoltaic , wind power, hydrogen energy, hydrogen energy vehicles and other industries to achieve carbon emission reduction. In this process, a large amount of financial support is needed. The monetary policy tool launched by the central bank this time is an important source of funds.
"In the short term, new energy sector generally has a large increase in , and has accumulated a relatively large profit-making market. There may be pressure for a pullback, and the high valuation has also discouraged some investors. However, if the industry develops in the long run, the development space for new energy is still very large. For example, new energy vehicles now account for less than 15% of new sales, reaching 20% in some months, but not 15% in the whole year, and may reach 100% in the future; photovoltaic wind power accounts for less than 10% in power generation. According to the central government's opinion, by 2060, that is, when carbon neutrality is achieved, the consumption of non-fossil energy will reach 80%, which will bring opportunities to the entire industry." 
releases trillions of directional liquidity
The People's Bank of China does not provide an estimated loan amount. Goldman Sachs predicts that carbon emission reduction support tools will bring RMB 1.2 trillion (about US$188 billion) in liquidity support in the next year. Everbright Securities expects that the tool will bring liquidity support of RMB 600 billion to RMB 900 billion in two years.Bloomberg commented that this is a targeted easing policy.
Bloomberg pointed out that the tool's loan interest rate is the lowest among the People's Bank of China's policy tools, which is lower than the loan interest rate for farmers and small businesses 1.95% to 2.25%, and is the same as the loan interest rate for financial stability-related tools. htmlOn November 9, analysts from Everbright Securities said in a research report that this new tool will bring some effects of lowering interest rates and lowering the deposit reserve ratio of . "The possibility of interest rate cuts or lowering deposit reserve ratios by the end of this year has also been further reduced," analysts said.”
GF Securities analysts also said in a research report released on November 8 that over time, carbon emission reduction support tools will provide the People's Bank of China with a channel to issue long-term loans, and therefore will reduce the need to supplement the long-term capital of the lender by lowering the reserve requirement ratio.
Carbon neutrality is related to China's strategic security
Bloomberg commented that as economic growth flattened, China is fine-tuning its policies, and recent problems such as power shortages highlight that fossil fuels still play an important role in the Chinese economy."Barron's" It is pointed out that while the West's carbon emissions declined (the carbon dioxide emissions generated by the U.S. energy consumption reached its peak in 2007), China's emissions are still rising. China's coal consumption is more than the other countries in the world, and more than half of the electricity still depends on coal.
However, China's solar installed capacity accounts for one-third of the world's global capacity, almost three times that of the United States; China's electric vehicles are more than twice that of the United States; China has also provided huge subsidies to reduce the cost of investing in renewable energy in various places. Kathlyn, head of Matthews's Asia ESG business "China is building an unprecedented industry, which is the most prominent impact of China in addressing climate change," Collins said. ”
Barron’s magazine believes that China has a strong driving force to accelerate green transformation. China’s dominance in the field of solar equipment and its competitive position in the field of electric vehicle batteries is expected to help China make huge profits in the era of carbon emission reduction. Marko Papic, chief strategist at
Clocktower Group, also pointed out that being too reliant on oil is not conducive to national security, because tankers heading to China are vulnerable to the U.S. lock-up is a situation of tension in international relations, and renewable energy produced by China can provide guarantees for national security.
Papic said: “China will be in the lead in reducing the use of fossil fuels, which is a need of its own strategy, not because of who asks them to do so. ”
From the performance of the capital market, Papik’s point of view is correct. Although the energy crisis has caused inconvenience to China’s production and life, the exchange-traded fund MSCI Clean Technology Index (KGRN), which includes clean technology products and services, has risen 29% in the past year. Mubashira Bukhari Khwaja, investment director at Aberdeen Standard Investments, said: “It can be seen that investors are very optimistic about China’s green stocks, which can be seen as China’s positive impact on COP26. ”htmlOn October 26, the State Council issued the "Action Plan for Carbon Peak before 2030", proposing six goals: promoting the replacement and transformation and upgrading of coal consumption, vigorously developing new energy, developing hydropower according to local conditions, actively and safely and orderly development of nuclear power, rationally regulating oil and gas consumption, and accelerating the construction of new power systems.
7 40 stocks in seven major industries bring opportunities, paying attention to 11 Chinese companies
In fact, finance and investment have become the central topics of the United Nations Climate Change Conference. Banks, insurance companies and asset management companies have all made commitments consistent with the net zero emission target.The 26th Conference of the Parties in the 2021 " United Nations Framework Convention on Climate Change " (COP26) The agenda is now half over. The meeting emphasized the role of public and private investment in reducing economic carbon emissions and increased the popularity of environmental, social and governance (ESG) investment thinking patterns. Barron's believes that individual investors should also pay attention to related investment topics.
However, this investment category called sustainable investment often changes and has a vague definition. In addition, sustainable investment is discouraged against some investors in the context of imperfect climate disclosure rules and overvalued valuations in some green industries.
Barron's recent research on global sustainability with Jessica, Jessica, head of global sustainability research at Morgan Stanley , J. Alsford) explores three strategies for sustainable investment and some of the best investment opportunities in the field.
The first is an exclusive strategy. Investors can invest their funds in a place that matches their definition of sustainable investment.For example, if you do not recognize the role of oil and gas companies in environmental pollution, then don’t invest in such companies. The second type of
is the integrated strategy. Investors can think more deeply about how climate change and energy transition will change the oil and gas industry and incorporate it into their decisions rather than completely keeping the oil and gas industry out. Investors can integrate ESG factors into investment decisions without at the expense of giving up profitable companies.
The third strategy is to focus on companies that are constantly improving according to the SDGs. Investors can continue to invest in the oil and gas , but only those companies that have vision, develop and improve climate-related business strategies.
Allsford said: "These three strategies involve completely different investment methods, but they all fall into the category of sustainable investment."
has a clear strategy, and the next step is to find the right stocks.
Morgan Stanley believes that overall, many companies will benefit from the decarbonization trend. Morgan Stanley has selected high-rated stocks in seven industries that represent some of the most attractive sustainable investment opportunities.
—Stocks in the renewable energy industry include:
China Jushi (600176.SH), Zhongtian Technology (600522.SH), Luoyang Glass (1108.HK), Engie (ENGI. France), Ørsted (ORSTED. Denmark), Siemens Energy (ENR. Germany), FirstEnergy (FE) and Sunrun (RUN).
——Stocks in the energy storage industry include:
Ganfeng Lithium (1772.HK), Panasonic (6752. Japan), Huayou Cobalt (603799.SH) and QuantumScape (QS).
——Hydrogen Energy industry stocks include:
YiHuatong (688339.SH), Sino Petrochemical (0386.HK), Johnson Matthey (JMAT. UK), NEL (NEL. Norway), Air Products (APD), Enbridge (ENB) and New Fortress Energy (NFE).
- Stocks in the sustainable alternative fuel industry include:
ExxonMobil (XOM), Chevron (CVX), HollyFrontier (HFC) and Marathon Petroleum (MPC).
- Stocks in the carbon capture, utilization and storage industry include:
Bayer (BAYN. Germany), ConocoPhillips (COP), NextDecade (NEXT) and Occupy Petroleum (OXY).
- Stocks in the electric transportation and green mobility industry include:
Tesla (TSLA), NIO (NIO), Ideal (LI), TPI Composites (TPIC), Schneider National (SNDR), Knight-Swift Transportation (KNX), FREYR (FREY), Fisker (FSR) and Alstom (ALO. France).
- Facilities renovation and efficient energy utilization industries include:
Guodian Nanrui (600406.SH), Sinopec Refining and Chemical Engineering (2386.HK), Covestro (1COV. Germany) and Rexel (RXL. France).
Morgan Stanley also pointed out that many stocks also face the adverse effects of decarbonization trends, including industries such as energy, electricity and utilities, cement, chemicals, coal, metals and mining, industry, automobiles, airlines and shipping.
Morgan Stanley is therefore bearish on the following stocks: Edison United Electric (ED), Continental Resources (CLR), XCel Energy (XEL), Ford Auto (F), BMW Auto (BMW. Germany), Nissan Auto (7201. Japan), American Airlines (AAL), Lufthansa (LHA. Germany) and Air France-KLM Group (AF. France).
article | "Barrons" contributors Guo Liqun and Guo Huiping
editor | Kang Juan
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