Investment Appeal of Power Sector Rises Amid Heatwaves and Computing-Power Synergy (Including Related Stocks)

The National Climate Center recently confirmed that the equatorial central and eastern Pacific entered an El Niño state in May. Experts predict it is highly likely to evolve into a moderate or stronger event during the summer and autumn, increasing the probability of a climate pattern with floods in the south and droughts in the north of China. Expectations of abundant water have catalyzed a significant divergence in the year-to-date performance of the hydropower sector, with first-quarter power generation data released by some listed companies already verifying a substantial improvement in river basin inflows.

On one hand, sustained high temperatures domestically continue to boost electricity demand. On the other hand, the concept of computing-power synergy is gaining increasing market recognition. Consequently, the power sector has shown active performance recently, with market attention steadily rising.

From the perspective of industry institutions, climate change-induced high temperatures this year will drive growth in electricity demand during the peak summer consumption period. Simultaneously, rising market expectations for domestic chip computing power may accelerate electricity consumption growth, creating investment opportunities within the industry.

Looking ahead, the coal-fired power sector is expected to be the first to benefit from the high temperatures. Factors such as rising spot electricity prices in coastal regions and the accelerated development of computing-power synergy will further drive the performance of the utilities sector in the secondary market. The investment value of sub-sectors like green power, hydropower, and nuclear power also warrants attention.

Research reports from several securities firms predict that the hydropower sector in the south holds allocation value, while high temperatures in the north will boost thermal power generation and thermal coal demand in related regions during the summer.

Related Hong Kong-listed power sector stocks include: HUANENG POWER (00902), CHINA RES POWER (00836), China Power International Development Ltd (02380), CGN Power Co., Ltd. (01816), HUADIAN POWER (01071), and DATANG POWER (00991).