Donald Trump’s election to the White House will bring inevitable negative effects for shipping, analysts warned Wednesday.
Shipping stocks and oil were already on the ropes as Trump’s entry into the Oval Office became increasingly likely - and the slide has continued after the result was confirmed.
Keep up to date with all the latest US election news and reaction here.
“The day is likely to bring considerable volatility,” warned analysts at Fearnley securities.
“Longer term it’s hard to pin down any specific impact on the various shipping segments. However, we would highlight container shipping as a potential negative if US were to significantly alter its free trade agreements,” wrote Jonathan Staubo, Espen Landmark Fjermestad and Peder Nicolai Jarlsby.
Share slide enters Europe
Early indications are that shipping stocks will follow the route set in Asia this morning, with Oslo’s Shipping Index showing early falls almost across the board.
John Fredriksen’s Frontline was down 3.5% in early trading, while BW LPG sagged by almost 6% and Wilh Wilhelmsen ASA had lost over 7% of its market value at the time of writing.
Falls among shipping companies in London were initially only marginal this morning. In Copenhagen, AP Moller-Maersk slipped by 3.5%, while Norden gained a little following its third quarter results announcement.
Christian Andersen, president of Avance Gas, tells TradeWinds the capital markets will be nervous for a few days but he expects stocks to rebound in the same way as they did after the UK Brexit vote.
Protectionism will prevail
Erik Nikolai Stavseth of Arctic Securities said: "Shipping, as a small sector in the overall financial markets, coupled with inherent high volatility and its sole purpose being to facilitate global trade means a Trump win will inevitably have a negative effect.”
He says bulkers and containers are likely to take a hit as Trump has targeted the imposition of punitive tariffs on US imports.
“The emergence of a trade war will have negative impacts on global growth and hence hit the majority of shipping markets,” Stavseth wrote.
Car carriers will also feel the pain of today’s outcome, while tankers will be in limbo, the analyst argues.
“Trump is all about protectionism and creating domestic value and jobs,” Stavseth said.
“Everything that rhymes, looks like or sounds like renewables will be under pressure and the fossil fuels with be given a priority pass.
“Under his presidency, Donald Trump will streamline energy production and infrastructure that has stalled under Obama’s ruling.
“Drillers, service companies and pipeline developers will benefit, as Trump’s pro oil-sector policies will help facilitate domestic crude oil production.”
Keep up to date with all the latest US election news and reaction here.
