Strong demand boosts Asian solar stocks

Asian solar stocks surged on a spate of good news about results and prospects worldwide.

The rally in bourses around Asia echoed a rally by their U.S. counterparts, with some rising as much as 20% on signs that prices for solar energy components are stabilising.

The global rally came as investors cheered figures showing a dramatic rise in new solar installations in Germany in the fourth quarter and higher prices for polysilicon, a key raw material.

In Wednesday trade in the United States, Chinese solar companies Hanwha SolarOne Co Ltd, JinkoSolar Holding Co Ltd, JA Solar Holdings Co Ltd, Trina Solar Ltd , Suntech Power Holdings Co Ltd and Yingli Green Energy Holding Co Ltd led the advance with gains of 23 to 4%.

Some analysts, however, were cautious about the uptick in solar stocks due to the oversupply of solar panels and falling prices.

"Investors should take caution in dealing with the shares, especially because PV (photovoltaic) equipment prices are still depressed and there is still huge overcapacity out there," said Hong Kong-based CIMB Research analyst Keith Li.

"Unless demand rebounds in a big way, the excess supply will remain an overhang on share prices," he said.

Avian Securities analyst Mark Bachman said polysilicon was selling for about $30 per kilogram in the spot market after bottoming out at about $24. He noted, however, that solar cell and panel prices were still dropping and said more companies would need to go out of business this year to ease the industry's massive oversupply. 

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