According to the latest Markets Live Pulse (MLIV Pulse) survey, the recent sell-off wave sweeping through green stocks seems to continue into 2024, marking the fourth consecutive year of decline in green stocks.
According to reports, this negative sentiment seems to sweep across a wider range of green asset classes, and Tesla may lose its position as one of the top ten constituent stocks in the S&P 500 index.
Nearly two-thirds of the 620 respondents to MLIV Pulse stated that they plan to stay away from the electric vehicle industry, while 57% expect iShares Global Clean Energy Exchange Traded Funds (ETFs) to continue their decline in 2024. The fund has fallen by about 30% this year.
At a time of bleak prospects, investors in green and environmentally friendly assets are coping with the impact of the post pandemic world, which is caused by a significant increase in interest rates. In addition, many states in the United States are experiencing sustained political backlash and a constantly changing regulatory background, which could expose greenwashing behavior and further damage their valuations.
Chat Reynders, who has been engaged in sustainable investment for 30 years, said that the downturn in green assets is a "watershed moment" for the industry. He stated that the promotion of environmental protection as a means of addressing climate change has led some investors to shift their focus away from traditional financial indicators such as supply, demand, and balance sheets.
Although respondents to MLIV Pulse generally hold a pessimistic view of green stocks in the short term, the situation is different when the time frame is extended. Most respondents anticipate that they will need to protect their investment portfolios from the impact of climate risks in the coming years.
Garvin Jabusch from market consulting firm Green Alpha Advisors stated that the current sell-off represents a temporary withdrawal of capital from renewable energy. He believes that a sluggish market is a good opportunity to buy, and he is increasing his holdings in utility stocks.
The prospect of EV is worrying
The next green asset category expected to experience a decline is electric vehicles, as they are still too expensive for many households struggling with long-term inflation.
Tesla's stock price has surged nearly 140% this year, reaching its peak in July, but has since fallen by about 20%.
Two years ago, Tesla's valuation surged to $1.2 trillion, making it the fifth largest company in the S&P 500 index. At present, its market value has dropped to below 800 billion US dollars, ranking eighth in the benchmark index.
In the latest survey, nearly 50% of MLIV Pulse respondents expect Tesla to fall out of the top 10 S&P 500 stocks next year. Tesla's investors are also considering how to deal with the company's executive risk, which is the CEO Musk, who often makes controversial comments on social media and shocks the market.