China's Greek Bailout

Jeff Siegel

Written By Jeff Siegel

Posted October 4, 2010

About a year ago, I had lunch with a guy who installed solar panels in Europe.

He was pretty successful, and was always looking to expand into new European markets. One market he particularly liked was Greece.

And apparently, he wasn’t the only one.

There were dozens of European installers and manufacturers eager to get a piece of the Greek market. The only problem was that a mountain of red tape was keeping most away…

Someone even told me that a solar or wind developer could actually go through three years of regulatory hurdles in Greece, get approval… then two days later, find that the project would be put on hold due to a random complaint that wasn’t brought up during the three-year regulatory process.

Can you imagine getting approval for a project, then placing an order for a few million dollars worth of solar panels — then find out a few days later that your project was being put on hold?!

It’s no wonder so few were willing to do business in Greece…

But a few weeks ago, the government finally unblocked about $2.7 billion-worth of renewable energy projects.

This is a pretty big deal.

Don’t get me wrong; Greece has not fixed its massive red tape problem. But this indicates that the government is finally willing to take the appropriate steps to attract new investments, which it desperately needs to help a struggling economy.

It’s certainly a step in the right direction.

Then this past weekend, we heard that China would buy Greek government debt and provide a $5 billion credit facility — of which much will go to help Greek shipping companies buy Chinese ships.

But this deal could also turn out to be a pretty sweet deal for Chinese solar players…

Profiting from China’s solar cash cow

It’s no secret that China’s dominant position in the solar market is all about cost.

Bottom line: The Chinese can make solar cells and panels much cheaper and much faster than pretty much anyone else.

And you better believe this is not a position the Chinese are willing to risk…

Not when solar remains to be one of China’s best and most sustainable cash cows — and not when Europe remains to be one of China’s best solar customers.

Although German solar manufacturers took the early lead in Europe’s solar market, there are a number of Chinese solar players today that get the majority of their business from Europe. One in particular that’s made Green Chip Stocks members a lot of money is Trina Solar (NYSE: TSL).

Europe has long been Trina’s primary market.  And for the year, we’re up about 73% on this one.

But that’s not why I’m telling you about Trina or any of the other major Chinese solar players…

The reason I’m telling you about these today is because — thanks to China’s offer to buddy up with Greece — the Middle Kingdom may have just further solidified China’s role as the world’s leading supplier of solar, a role the United States could have boasted, had we not been too busy having pissing contests in Washington to offer any kind of meaningful support to an industry that’s proving itself to be one of the greatest long-term investment opportunities of the 21st century.

You see, with this deal, China isn’t merely buying some debt; it’s also expanding its presence in Greece’s shipping industry.

Greece actually has the largest merchant fleet in the world, and today 50 percent of Chinese merchandise is transported on Greek boats.

While the Chinese Prime Minister was making the rounds in Europe, he stopped off at the Greek port of Peraeus. This is where the Chinese have been working for the past two years to expand Cosco’s activities at the port.

Cosco (China Ocean Shipping Company) is China’s largest shipping and logistics company. It also accounts for half of the port’s commercial traffic.

Strengthening its logistical muscle in a market that remains strong for solar — and in a country where the government just unblocked nearly $3 billion in renewable energy projects… Well, let’s just say it’ll take an act of God at this point to pass China in solar dominance.

But at least we can still make a few bucks!

Over the past few months, the solar market has been booming. And it’s been a great ride.

But even with China going full speed ahead in the race to integrate solar, many of these solar stocks are starting to get overheated…

That being said, when the sector does finally cool off a bit (and it will), we could see yet another opportunity to buy some solid Chinese solar players on a dip.

This next time around, we’ll focus primarily on Trina Solar (NYSE: TSL), Solarfun (NASDAQ: SOLF) and JA Solar (NASDAQ: JASO) — which, incidentally, we recently sold for an 84% gain!

To a new way of life, and a new generation of wealth…

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