VIEW-HSBC favours solar, wind over integrated power

By Leonora Walet

HONG KONG (Reuters) - HSBC Global Asset Management has increased its exposure to solar power-related stocks at the expense of integrated power plays, and believes technology companies in the solar and wind sectors offer solid long-term opportunity for investors.

"There is increasing evidence of slowing global demand and we see the pressure on the solar cell industry in the short term. But that's not enough to make us negative on solar," said Francois Dossou, who manages the Climate Change fund at HSBC's Sinopia fund arm.

The investment arm of global bank HSBC Holdings (0005.HK) said the fund remains "overweight" on solar stocks, using recent weakness in the market to add to holdings in the sector.

The fund, however, has trimmed its position in integrated electric companies in Japan, such as Tokyo Electric Power Co (9501.T), Asia's biggest utility, to take advantage of recent spikes in share prices.

Crude oil prices, which have more than halved from their peak in July, improved the earnings outlook for many utilities in the world's second-biggest economy, supporting share price performance. On November 4, Tokyo Electric's share price climbed to its highest close in more than a month after it announced improved earnings forecasts.

Integrated power accounted for 23.8 percent of HSBC's Climate Change fund at the end of October. Tokyo Electric is one of the fund's largest holdings along with integrated plays such as Germany's E.ON (EONGn.DE) and the FPL Group Inc (FPL.N) of the United States.

"We prefer, in the long-term, high-tech oriented sectors such as solar and wind which are experiencing more favourable figures in terms of growth performance, and favour less the integrated power sector, which are less technology-oriented, despite their being diversified," Dossou told Reuters in an interview.

Low carbon energy production and energy efficiency-related sectors are expected to gain as investment in conventional energy production declines, he said.  Continued...