Between the credit crunch and oil prices, the markets are really getting beat up. From India to Hong Kong to Toledo to Tokyo, the financial markets and auto manufacturers stocks have dropped like a bowling ball through wet paper towels. Oil prices continued their climb to record highs. The impact on drivers and inflation has reverberated worldwide.
The gas currently at gas stations in based on oil that was bought much cheaper than today’s. Gas prices will rise steeply in the months ahead. What does this all mean for investors, including venture capitalists?
Alternative fuel vehicles and their suppliers as well as hybrid car manufacturers have garnered much renewed focus. Makers of higher mileage hybrid cars cannot make them fast enough.
By extension, there are some other ‘cleantech’ sectors that should be worth a look also. The Chinese government is providing certain incentives to those investing in renewable energy. The ‘cleantech’ sector can include everything from low energy light bulbs to alternative energy production to pollution reduction technologies.
With the justifiable return of risk aversion to the market, many sectors will suffer and many others will look more promising. Skyrocketing oil prices and the sub-prime debacle have taken their toll with layoffs at major airlines and big problems in financial services for companies like Lehman Brothers. Out of all this gloom comes the need for reducing gas consumption and the search for alternative energy sources.
Even world finance ministers are supporting the notion of pouring money into a climate investment fund administered by the World Bank. The purpose would be to explore ways to boost energy efficiencies, reduce greenhouse gases and address food shortages. If the governments of several countries are committing billions of tax dollars to this area, maybe there’s a future in it for alert investors.
So which greentech or alternative fuel technologies are venture capitalists looking at in Hong Kong? Wind power and wind turbines, water treatment, solar energy, biofuel, fabless semiconductor, clean-coal, LEDs and building energy efficiency are all areas of interest. The investment in these technologies in China this year should be about three-quarters of a billion dollars. Worldwide, the investment in cleantech is in the billions.
Cleantech funds seem to be opening and closing every other week. China has been a big benefactor of this cash influx because of the major push that is on to clean the air and water, improve renewable energy sources and make buildings more energy efficient.
Although patents in the cleantech sector are dropping, the leaders in new patents are in the auto industry. Automobiles with greater gas mileage or hybrid technology will benefit the growing number of drivers in China.
Venture capitalists also see benefits to high population areas like Hong Kong for clean air and water. Some new technologies even harvest fish underwater more efficiently. All benefits to cities with large populations that depend on ready sources of food, water, energy-conserving building methods and clean efficient transportation. This may be one of the few areas that outside investors will entertain at the moment. With the Chinese markets off considerably since the beginning of the year, institutional investors will be skittish about any theme that does not appear to be part of a forward-looking trend.
* For series, references are published in the last installment of the series.
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