US-listed shipping equities have fallen sharply amidst a broad market selloff driven by China fears.
Almost all publicly traded shipping stocks were down, many in the high single digits or low double digits across the 21 August and 24 August trading sessions. The largest two-day declines were experienced by NAT (-9%), Teekay Tankers and Euroseas (-10%), Ardmore and Box Ships (-12%), Dynagas LNG Partners (-15%), Ultrapetrol (-21%) and Freeseas (-29%).
The past two trading sessions topped off a more extended downward slide for shipping equities. “Shipping stocks lost an average of 8.3% last week,” said Morgan Stanley analyst Fotis Giannakoulis on 24 August. “Even companies with solid balance sheets are trading at steep valuation discounts.
“Out of the 28 stocks for which we track the net asset value [NAV], 16 now trade below their liquidation value despite the fact that asset values are already heavily discounted and many of them earn highly profitable rates and may have their vessels employed under firm period charters,” he continued.
“The latest pressure appears more technical rather than fundamental as shipping stocks are widely owned by energy focused hedge funds that have been lately forced to liquidate non-core holdings and stocks with limited trading liquidity, which is predominately the case in this sector,” noted Giannakoulis.
According to Clarksons Platou Securities analyst Omar Nokta, “Softer tanker rates amidst a broad market sell-off are testing investor patience.
“Last week was rather difficult for the broader equity markets and the tanker equities were not spared, especially as spot rates have come under pressure in both the crude and product segments,” said Nokta on 24 August, noting that tanker stocks lost 9.5% of their value last week.
“We believe the current environment is the perfect time to buy into the equities as broader market pressures have exacerbated stock performance in a seasonally weaker part of the year,” opined Nokta.