Last week saw another sell-off in equity capital markets across the globe, spurred by the triple witching day in New York. The virus has now finally reached the United States and dominates all public and private life. Some economists predict a potential contraction of the US GDP by more than 5% in Q2, followed by a swift recovery in Q3. The US government is preparing counter-measures of nearly the same size, i.e. 5% of GDP or even more. European governments have already agreed or will decide on similar far-reaching fiscal packages soon. 

But there is also a glimmer of hope: The latest data from JHU shows a reduction in new confirmed cases in Germany for the second day in a row. But we need to be patient as these data points are probably skewed to the low side due to the weekend.

Shipping stocks suffered badly from the negative newsflow and lost more than 14% w-o-w. Offshore companies, VLGC owners and crude tanker companies dropped the most, driven by the fear that demand for crude oil will be weak for the remainder of the year. Furthermore, the oil price war between Saudi Arabia and Russia may damage the US shale oil industry severely which would impact tanker markets negatively in the long term. Charter rates for VLCCs fell from previous weeks' outrageous levels and caused further nervousness although current levels are still very comfortable. In our view, the positive aspects of the contango and increased floating storage outweigh these risks. By contrast, we see a potential 'cease-of-fire' between Saudi Arabia and Russia as a major threat to today's strong VLCC markets.

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