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NOTOS NEWS | MARITIME MONTHLY 
FEBRUARY 2020

The spreading coronavirus has further exacerbated the pressure on maritime stocks during the past four weeks. The gas and container sectors were hit particularly hard. Our sentiment indicators dived deeply into negative territory.

ALL SUB-INDICES HEAVILY IMPACTED
Our sector indices show heavy losses in the range of 7 to 17 percent compared to the previous month’s end. Earnings in the main shipping sectors have dropped significantly. It is widely expected that in the aftermath of the spreading coronavirus, global trade and growth will be heavily affected. While the first quarter of this year seems to bear the brunt, substantial catching-up effects are hoped for the second half of 2020 at least. Meanwhile, the OECD has revised downwards its growth forecast. Governments and central bankers worldwide are alerted. The first fiscal stimulus programs have already been approved. On Tuesday this week, US Fed lowered the Fed Funds Rate by 50 bps to mitigate the effects of the virus.

GAS STOCKS HIT HARD 
The gas sector was hit hard as it lost about 17 percent m-o-m. One key determining factor for weak LPG stock prices was the softer oil price. Lower oil prices can make the US shale oil production unprofitable once they drop below a certain level. Since a lower crude oil production goes hand in hand with a decreasing LPG production and exports, especially the LPG tanker stocks suffered.

LINER SECTOR THE LEAST AFFECTED 
The liner sub-index corrected by seven percent m-o-m in January and nearly eight percent in February. This is the smallest loss compared to the other maritime segments. Still, the officially ordered extended holidays in China have also taken their toll on the liner market. Export volumes dropped, forcing carriers to cancel sailings and reschedule vessels. Container boxes are reported to be stuck in ports - empty in Western Europe and still full in China.

CONTAINER INDEX LOSES GROUND
The container sub-index, one of the least affected sectors a month ago, has rapidly followed its sister sectors by losing about 17 percent m-o-m in February. The weaker vessel demand has resulted in lower earnings for container ships and lower container owner stock prices alike.

SENTIMENT INDICES DEEP IN NEGATIVE TERRITORY
The Notos Maritime Sentiment Index has continued its fall into negative territory, followed by the sub-indices for the dry bulk- and the tanker-sectors. Also, for the first time since almost 12 months, the container sentiment has turned negative. We see this as a signal that shipping stocks are unlikely to recover quickly, especially as meanwhile global financial markets have strongly reacted to the most recent coronavirus news. 

TRADING STRATEGY IN LINE WITH BENCHMARK
Similar to the previous month, the Notos Maritime Strategy Index fell more or less in line with its benchmark, the Dow Jones Global Shipping Total Return Index. Altogether, the trading strategy and its benchmark have lost as much as 26 and 27 percent, respectively, since the beginning of this year.
  
Our exposure continues to focus on the crude- and gas-tanker market. Although these markets were the first to suffer severely from the downturn, we still managed to outperform the benchmark. Thus, we believe our portfolio to be well positioned once the markets start to recover.

Please do not hesitate to contact us if you wish to know more about our trading strategies.

GLOSSARY
NOTOS SHIPPING INDICES | Measure the average performance of listed shipping companies in each sector
NOTOS MARITIME SENTIMENT INDEX | Measures the sentiment of global shipping markets, ranks between -1 and +1

NOTOS MARITIME STRATEGY INDEX | Discretionary trading strategy on shipping risks

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DISCLAIMER
This document has been prepared and approved by Notos Consult GmbH and is for informational purpose only. The information presented in this report is intended for the recipient to whom it was delivered. Reproduction or distribution of this document in whole or in part is not permitted without the express written consent of Notos Consult GmbH.
This document contains forward-looking statements. We caution the reader that forward-looking statements are not guarantees of future performance. Past returns are no indication of future returns. The development of the industry,
markets and companies described in this document, may differ materially from the forward-looking statement contained herein.

Information and opinions contained in this document have been compiled from sources believed to be reliable. Unless otherwise stated, any statements herein are based on our own estimates at the time of publication. Notos Consult GmbH makes no representation as to the accuracy or completeness of any of the information contained herein and accepts no liability for loss arising from the use of the information provided. 

This document is not an offer of any kind. This report has been prepared separately from any proposed offering of any security and as such information herein must not be relied upon as having been authorized or approved by the issuer of such security.

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