FEAR ON THE DANCEFLOOR
It was an overall negative week for maritime stocks. The fear about the Corona virus spread all over the oil, transportation and cruise markets. Analysts from Goldman Sachs are now warning that the demand for crude oil might be negatively effected due to subdued demand from China. This fear led to an extended drop in oil and gas prices, which in turn caused investors to withdraw funds from the oil & gas industry. Transport companies connected to the oil and gas sector are often included in these sector portfolios and were not able to escape from the bad karma.
This sudden change in sentiment is in contrast to the actual earnings in the tanker sector, which corrected also but are still well above last years levels. Prices for second hand vessels also continued their upward trend. So we think that stock prices may have overreacted and caused their price/earnings ratios, dividend yields and price to NAV ratios to improve. We took the chance to increase the weighting of the sector in our Maritime Strategy Index.
Our sector indices unveil that all maritime sectors lost ground week-on-week. Container stocks lost more than 10% due to a sudden correction in share prices of Costamare and Seaspan.
Last week Invesco decided to wind-down it's "Invesco Shipping ETF". The ETF had roughly 45m AuM and invested in the stocks of the Dow Jones Global Shipping Index. This decision caused further rumours in the market about additional selling pressure on maritime stocks.
Our sentiment index dropped significantly last week, but it's still above the zero-line, indicating a continued positive sentiment for maritime stock markets. Let's see, whether markets are to stabilize next week.