US-listed shipping equities are falling Monday as stocks tumble worldwide amid selloffs in Asia over escalating Covid-19 coronavirus fears.
European stocks have likewise slid since the start of their trading day as Italy's main index fell more than 4.5% after the virus infected 200 people there and killed five.
All but two out of more than 50 New York-listed shares across the industry have sunk since 9 am New York time.
The Dow Jones Industrial Average paints the broader picture for US equities in general, having lost 970 points to reach 28,023.
"It's gross out there," Evercore analyst Jon Chappell wrote in a clients' note written Friday.
"There is no sugar-coating just how bad the sentiment on shipping stocks is at the present, and quite frankly there is no defending the prevailing mood."
Jacob Meldgaard-led tanker owner Torm declined 9.4% to $7.40 just before noon, while Herbjorn Hanssen-led Nordic American Tankers fell 8.6% to $2.99.
Tanker shares are getting hit hard because Covid-19 has caused European and Asian demand for crude oil to fall, Jefferies analyst Randy Giveans said.
Good time to buy
He said shipping's depressed shares present good buying opportunities for investors going long.
"If your timeline is next week, I'd say be careful," he told TradeWinds.
Petros Pappas-led Star Bulk Carriers dropped 8.4% to $8.27 as Angeliki Frangou-led Navios Maritime Containers plummeted 7.8% to $1.18.
The two equities to see gains are Gary Vogel-led Eagle Bulk Shipping, which jumped 4.1% to $3.32, and Tony Lauritzen-led Dynagas LNG Partners, which has gone up 4.7% to $1.79.
Investors should always expect the unexpected in shipping but keep in mind that bad markets make for great buying opportunities, Deutsche Bank analyst Amit Mehrotra said.
The trick, he said, is to buy into "good companies" such as Star Bulk Carriers and tanker owner Euronav that can endure weak markets and exploit them for long-term shareholder value.
"We are recommending our clients to be aggressive buyers of these companies," he told TradeWinds.
When will things get better?
It is hard to say when shares will trade up again, Stifel analyst Ben Nolan said.
"Depends on the news flow," he told TradeWinds.
"I think last week there was some hope that the bottom had been found, but news over the weekend has proved that to be wrong. Hard to say when things will be resolved for good."
In the meantime, the downward pressure on shipping equities are making it harder for owners to get capital, he said.
"Clearly, the capital markets are not very open right now to shipping until things settle down," he said.
Nolan reaffirmed other analysts' suggestion to buy shipping shares now but with caution.
"Generally I have a buy the dip theme, but it is hard to pick the specific bottom with conviction," he said.
As long as the virus poses a global threat, shipping stocks everywhere will take a hit, Noble Capital Markets analyst Poe Fratt said.
"It matters less where new cases break out, but rather that the coronavirus is spreading and the reaction is generally negative for global growth," he told TradeWinds.
