Shipping equities sprang back strongly on Tuesday as global stock markets rallied from a historic bloodbath that spread from Asia to Europe and US the previous day.
In Monday’s rout, at least six shipping companies shed more than $1bn from their market capitalisation as markets were gripped by fears of a coming recession in the US.
Shipowners told TradeWinds on Tuesday that they were calm about the sell-off given cash generation in shipping today, and those with long-term skin in the game could only watch and hold their nerve amid the short-term noise.
South Korean shipbuilders led a rally on Tuesday, and shipowners in Asia and Europe followed suit.
HD Hyundai Heavy Industries shares rose just over 10% on Tuesday, largely erasing the losses on Monday to end the day at KRW 205,000 ($149) per share.
Shares in Hanwha Ocean, the former Daewoo Shipbuilding & Marine Engineering, recovered 8.7% to end the day at KRW 29,300.
Japanese shipbuilder Mitsubishi Heavy Industries looks to have erased any losses incurred during the sell-off in the past couple of days.
The Tokyo-listed company’s shares snapped back almost 20% in early trading on Tuesday to end the day at ¥1,535 ($10.50) per share.
Mitsui OSK Lines was up 15% to ¥4,610, NYK Line was up 13.4% to ¥4,535 and K Line was the biggest riser, up more than 17% to ¥1,974 at the close on Tuesday.
As TradeWinds reported on Monday, Japan’s big three shipowners were among the hardest hit amid the worst trading day on the Tokyo exchange this century.
Hong Kong-listed Cosco Shipping Energy Transportation, Pacific Basin and Orient Overseas (International) Ltd were largely unchanged from Monday’s lows.
Oslo-listed shipowners’ shares shot up early on Tuesday before moderating their gains.
Several big name owners saw Monday’s losses erased briefly before settling.
Frontline shares leapt to NOK 253.90 ($23.06) shortly after trading in Oslo opened, besting its Friday close of NOK 251.90 before sliding to NOK 248.30 in early trading.
Shares of Wallenius Wilhelmsen, the world’s largest car carrier operator, followed a similar pattern: hitting NOK 95.75, better than last week’s finish of NOK 93.10, then settling at NOK 92.30.
Chemical tanker giant Stolt-Nielsen shares skyrocketed to NOK 413.50, then ticked down to NOK 401. Last Friday, shares closed at NOK 407.50.
Monday’s equities pummelling began in Asia as investors in the Far East reacted to a worse-than-expected US jobs report on Friday and indices in Japan and South Korea took a tumble.
A downturn in the world’s largest economy would certainly hit consumer demand and hurt shipping, but some experts argued that US recession fears are overblown.
Goldman Sachs raised the possibility of a downturn to 25% from 15%, but still argued that a recession is unlikely.
“We continue to see recession risk as limited,” Goldman economists led by Jan Hatzius said in a report to clients published on Sunday.
They argued that the economy looks “fine overall” and that the US Federal Reserve has room to manoeuvre.
In a note on Monday, Clarksons Frode Morkedal said the fundamental case for shipping remains strong and that the sell-off could be an opportunity for investors to buy up shares at a discount.
Many expect sectors across the industry to enter a prolonged period of strength thanks to increasing consumer demand, an ageing fleet and a small orderbook.
