Chinese power stocks slump after US grid ban: is the sell-off warranted?

Chinese power equipment stocks have tumbled after the United States moved to bar certain foreign-made grid equipment and related software, but some analysts believe the sell-off may have been excessive, with enforcement still uncertain and Chinese firms able to offset the impact in other markets.

Sungrow Power Supply, a major Chinese inverter maker, slumped 12.24 per cent on Thursday after US President Donald Trump signed an executive order a day earlier, declaring a national emergency and barring certain foreign-produced bulk-power equipment and associated software from being bought or installed in the US.

Also on Thursday, Sieyuan Electric, which is listed on Shenzhen’s main board where daily price movements are capped at 10 per cent, hit its maximum limit with a 10 per cent fall.

Despite the sharp equity-market reaction, analysts said investors might have overestimated the potential fallout.

Zhou Mi, a researcher at the Chinese Academy of International Trade and Economic Cooperation, a think tank under the Ministry of Commerce, said the direct impact would not be as severe as markets feared, though the ban “clearly touches a lot of companies”.

Its real-world effect, he noted, would depend on how strictly Washington enforced the order, as US officials would need to weigh the restrictions against potential disruptions to the American economy and end users.