A new analysis by MSCI finds that clean energy stocks are as overcrowded as technology stocks were just before the bursting of the dotcom bubble. Steve Johnson writes for the FT:
Ownership of renewable energy stocks is as crowded a trade as technology stocks were at the height of the 1999 dotcom boom, according to index provider MSCI.
The claim follows a flood of investment into the sector, with global inflows into clean energy exchange traded funds surging to $14.7bn in the six months to the end of March, according to data from Morningstar, up from just $1.3bn in the same period of 2019-20.
This helped push stock prices sharply higher with the S&P Global Clean Energy index jumping 150 per cent in the year to the end of March, pushing sector-wide price earnings ratios above 35.
MSCI has calculated that stocks that are crowded according to its metrics accounted for more than 8 per cent, by weight, of the renewable energy sector as of the end of March, far more than for cyber security, the next most crowded sector, at under 3 per cent.
This left clean energy stocks only a fraction less crowded than small and mid-cap technology companies were immediately prior to the 2000 dotcom crash, during which the tech-heavy Nasdaq Composite index plunged 78 per cent over the subsequent two-and-a-half years.
Read more here.