Shares of Israeli liner company Zim plunged more than 15% in New York trading on Monday following a report that container carriers had negotiated side deals to avoid further terror attacks by the Houthi militant group.
Stock of New York-listed Zim recovered somewhat in late afternoon trading but still was down more than 7% on elevated volumes after major liner companies AP Moller-Maersk of Denmark and Hapag-Lloyd of Germany denied striking any safe-passage agreements with the Houthis.
Reports of negotiations between liner companies and the Iran-backed rebels were first published by news publication ShippingWatch of Denmark. The outlet later issued an update saying that it understood it was not the largest liner companies who have entered such deals.
The quid pro quo deal purportedly agreed by such carriers is that they would not transport Israeli cargoes or call on Israeli ports.
Zim shares fell as low as $12.35 in Monday morning trading on the New York Stock Exchange, but rebounded to $13.57 as investors digested the news. Mid-afternoon trading volumes already were triple the average 5.2m shares.
The drop “seems driven by the news around Houthis side agreements with shipping companies”, said Omar Nokta, who covers Zim as lead shipping analyst for investment bank Jefferies.
Denials of any such pacts from Maersk and Hapag-Lloyd were reported by Bloomberg.
TradeWinds reported on Monday that Chinese liner giant Cosco Shipping Lines has suspended visits to Israeli ports, citing Israeli media reports.
The reports did not give any details and Cosco does not appear to have made any formal statement.
However, if confirmed, the move by the fourth-largest liner operator would be a significant development that would affect other liner operators.
That would include Zim which cooperates with Cosco and would have to operate more services, the reports said.
The Houthi regime, which controls large swathes of Yemen, started attacking commercial vessels in November to put pressure on Israel in its war with Hamas in Gaza.
The Houthis claim to be targeting only vessels they believe to be controlled by Israeli interests or calling at Israeli ports.
But several attacks on liner operators have led most of the top-ten liner operators to pause transits through the Red Sea and the Suez Canal.
Zim, which is backed by Israeli billionaire Idan Ofer, already has seen its stock pummelled by the overall global downturn in fortunes of the container ship market.
As TradeWinds reported earlier Monday, it was the worst 2023 performer of the 27 shipping stocks under coverage of Jefferies with a 42.6% drop.
However, the stock had nearly doubled over the past 30 days as investors reacted to news that liner companies would steer clear of the Suez Canal, adding tonne-miles that would soak up available capacity.