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NOTOS NEWS | MARITIME MONTHLY 
JANUARY 2020

The coronavirus holds shipping markets firmly in its grip. Crude tanker stocks lost up to 30% in one month and our sentiment indices went into negative territory.

TANKER STOCKS FALL SHARPLY
Share prices of tanker companies lost more than 23% m-o-m. The novel coronavirus has caused growing concerns about a sharp reduction in oil demand from the air- and land-transport in Asia. The latest estimates published by news agencies range between 250k bpd and 1,000k bpd lower oil demand for the foreseeable future.

Furthermore, it seems that the US sanctions on part of the Cosco VLCC fleet have been lifted which may re-add 20 vessels to the global VLCC fleet. Crude tanker stocks are now trading at around 0.8x NAV, again.

LINER COMPANIES ARE THE RELATIVE WINNERS
Our liner index lost ‘only’ 7.3% in January. This development is to some extent influenced by the special situation at Hapag Lloyd. Mr. Kühne and CSAV both seem to be trying to reach the 30% stake in Hapag Lloyd in order to circumvent a potential mandatory take-over bid once their shareholder agreement ends. CSAV now surpassed this level after buying a 2.2% stake from Qatar.

BULKER MARKETS VERY LOW 
In our November edition, we already mentioned that we would not prefer bulker stocks for long-term investments. The sector lost 21% in January. We now think that we may carefully start to collect some shares here or there if prices come down further in the course of the Chinese New Year. With spot charter rates for capes now below zero, any such investment is clearly counter-cyclical and not supported by the current fundamental market environment.

BULKERS’ PERFORMANCE CLOSE TO OFFSHORE
Our sector indices show a strong negative shock across all maritime segments in January. The performance of the bulker stock index was nearly as low as the performance of the offshore index. 

Liner companies were able to withstand the current meltdown to some extent and are now the top performers y-o-y.

SENTIMENT INDICES TURN NEGATIVE
The Notos Maritime Sentiment Index dropped below zero as of the end of January. This development signals a high probability that shipping stocks will stay depressed for some more weeks.
 
Bulker and tanker sub-indices also dropped below zero and indicate further weakness.

Only the container sentiment has remained above the critical zero line. But we doubt that this sector will withstand gravity.

NOTOS MARITIME STRATEGY INDEX CLOSE TO BENCHMARK
Our trading strategy fell more or less in line with its benchmark. This was not intended as we had only little exposure to the market at the beginning of the year. Our beta sank to 86% during January.

From mid-January on, we increased our exposure in crude tanker stocks as well as in selected LNG carrier stocks. 

As shipping stocks in January lost nearly 30% relative to the broad markets like the S&P 500, we opened a ‘pair trade’ by buying some at-the-money put options on the S&P 500. We think that we will see some mean reversion in the next months. 

Please do not hesitate to contact us if you wish to learn 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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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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