It's been an ugly week so far for US stocks on rising Covid-19 numbers and uncertainty over the presidential election, but shipping shares have had it twice as bad.
The 30 maritime stocks under coverage of investment bank Jefferies dove 9.8% between start of trading Monday and the close on Wednesday, almost twice as bad as the performance of the S&P 500 at 5.8% and the 5.9% fall in the Russell 2000 index.
Jefferies lead shipping analyst Randy Giveans reports that all 30 listings suffered.
While the broader market shows signs of stablising Thursday with the Dow up 300 points in afternoon trading and shipping shares mixed, it was still a tough week.
"With every sector and every stock lower, this shows a complete risk-off environment, regardless of rates, outlook or valuations," Giveans said.
"Sentiment remains poor, and not many investors are willing to step in here due to ongoing Covid concerns and election uncertainty."
The flagship dry bulk and tankers sectors fell 11% and 10%, respectively, while the recently buoyant containership listings couldn't avoid a 7% slide.
Gas was no better, as LPG shares plummeted 12% and LNG shares gave up 9%.
The losses come as shipping shares were trading at steep discounts to net asset value (NAV) virtually across the board, with investor interest said to be near record lows.
Virus fears were playing a larger part. The US reached a record 70,000 daily new cases this week based on a rolling seven-day average, while European nations like France and Germany imposed new lockdowns.
Uncertainty over the 3 November US presidential election likely contributed to the volatility, experts said.
Still, some shipping names were clawing back losses in afternoon trading Thursday, with tanker owenrs Nordic American Tankers and DHT Holdings both up 2.6%, International Seaways climbing 2.3% and Teekay Tankers adding 2%.
Bad as shipping's performance has been on the week, Giveans said it's important to remember the sector's inherent volatility and that the script can flip.
"They're high-beta, so usually 1.5 to two times the overall market. There are certainly periods of time when shipping massively outpeforms" the broader indices, Giveans said.
