Trump is back. Will renewable energy stocks tag along?

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Investors would be wise to ignore the rhetoric and instead focus on the fundamental underpinnings of a sector that is bound to grow in the years ahead, no matter who occupies the White House

If you listen to U.S. political noise, Donald Trump’s return to the White House looks like a very good reason to stay clear of renewable-energy stocks. Tune out the noise, though, and you may be surprised by what a bet on wind and solar might do.in the U.S. presidential election this week, clean-energy stocks – already in the dumps – took a turn for the worse., an exchange-traded fund that provides one-stop exposure to 101 stocks and acts as a decent barometer for the sector, sank 7.

“But I think that the U.S., as we’ve seen in the past, will survive this change of politics,” he added.During Mr. Trump’s first term, from 2017 to 2021, renewables did considerably better than that: The iShares Global Clean Energy ETF soared 306 per cent, including dividends. It outperformed the S&P 500 by 223 percentage points over this four-year period.

What’s more, investors became infatuated with the sector as the cost of producing electricity from renewables declined to levels that made solar and wind competitive with traditional energy sources, bolstering the economic incentive to going green. Given the market’s reaction to Mr. Trump’s victory, investors aren’t optimistic. If he repeals subsidies in the Inflation Reduction Act, some observers expect that the sector’s profit margins will shrink.

 

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