28-06-2021 Bounce-back for US shipping stocks as focus returns to rates, By Joe Brady, TradeWinds
It didn’t take long for US-listed shipping stocks to reverse a one-week hiccup in share prices caused by jitters in the broader markets and inflation worries. Shipping shares snapped back to a none-week gain of 7.6% on Friday, more than making up for the 5% drop in the prior week and continuing the upward momentum for 2021, according to data from Jefferies.
The 30 listings under coverage of the US investment bank are now up 74.2% year to date and 57.6% compared to the same period of last year. Only one company, Herbjorn Hansson’s Nordic American Tankers, lost share value during the week as the average gains outpaced a 2.7% climb by the S&P 500 and 4.3% jump in the small-cap Russell 2000 index.
One catalyst likely helping the sector was the three-day Marine Money Week conference, usually held in Manhattan but moved online this year due to Covid-19. “Last week’s Marine Money Week came at a perfect time to highlight the ongoing industry strength,” said Jefferies lead shipping analyst Randy Giveans.
“For the week ahead, Tsakos Energy Navigation (TEN) will conclude first-quarter earnings season, but rate movements will be the primary driver in equities.” TEN, the diversified Greek tanker owner, is scheduled to report earnings Tuesday, well after other US shipowners have reported their first-quarter results.
One of the week’s top-performing sectors was containerships, and their profile was boosted when Giveans made an appearance on US cable television network CNBC. A program host congratulated the analyst on correctly projecting further gains for both Israeli liner company Zim and Greek boxship lessor Danaos at his last appearance in March. Since that time Zim gained roughly 70% and Danaos 35%. Giveans was asked whether the stocks had more room to appreciate. “Absolutely, there is certainly a lot of room to run,” Giveans said. “Ever since then rates have only gone in one direction and that is higher. And that is after most people, myself included, thought there might be a little bit of a rate pullback after we saw all these elevated levels. But that is not the case.”
Both companies were among the week’s top 10 shipping performers, with Zim climbing 15.6% and Danaos jumping 9.2%. Tankers matched containerships 8% rise on the week, and two leading product tanker owners placed in the top five company gains. “Asset values are ticking higher, but clearly investors are looking past the current Tanker rate weakness to a much stronger market in the fourth quarter and 2022,” Giveans said.