Solar ETF Enters Bear Market

Somewhat quietly compared to the Global X Social Media Index ETF (NasdaqGM: SOCL), iShares Nasdaq Biotechnology ETF (NasdaqGM: IBB), Internet ETFs and other momentum offerings, the Guggenheim Solar Energy Index ETF (NYSEArca: TAN) has fallen on hard times.

With Monday’s tumble of more than 4%, TAN is now down 21% from its March 7 high, a stunning reversal of fortune for an ETF that was not only last year’s top-performing energy ETF, but also the best non-leveraged ETF of any stripe. [Other Momo ETFs Tumble]

Even with Monday’s decline, TAN is still higher by 8.3% this year, noticeably better than IBB, SOCL and the largest Internet ETFs, all of which are in the red year-to-date. Still, China, the 800-pound gorilla in the solar room, looms large in determining the near-term fortunes of TAN and the rival Market Vectors Solar Energy ETF (NYSEArca: KWT). KWT is down about 16% since March 7.

On Monday, Credit Suisse pared its 2014 Chinese solar installation forecast by 500MW to 11.5GW, well below the 14GW the Chinese government previously forecast. Credit Suisse says Jinko Solar (NasdaqGS: JKS), Trina Solar (NYSE: TSL) and Canadian Solar (NasdaqGS: CSIQ) have access to project financing, but Yingli Green Energy (NYSE: YGE) and ReneSola (NYSE: SOL) do not, Shuli Ren reports for Barron’s.

Yinglie Green and ReneSola, which sport an average of price tag of just over $3, combine for less than 4% of TAN’s weight. Credit Suisse has sell ratings on the two stocks. It is not just smaller holdings that are weighing on TAN.