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Outlook for shipping stocks to remain depressed

Outlook for shipping stocks to remain depressed
Analysts expect the outlook for shipping equities to remain depressed, although some opportunities are seen for stocks that have already been heavily traded down.

A panel of four analysts at Marine Money in Singapore were largely negative in summing up what they see ahead for the next 12 months. Both Erik Nikolai Stavseth, a shipping analyst with Arctic Securities and Rahul Kapoor, director of equity research for Drewry, agreed that 2016 it would be “another year of uncertainty”. JP Morgan head of regional transportation research, Corrine HT Png commented that it would be, “Another year of volatile trading”.

The one member of the panel a bit more upbeat was Amit Mehrotra, lead shipping analyst with Deutsche Bank, who saw some opportunities in the dry bulk space.

Looking at the market ahead Stavseth compared it to the smog, known as the haze, currently blanketing Singapore. “Shipping right now is even more hazy than Singapore is today.”

While tankers have been flavour of the month he noted that this sector only had possibly two more good quarters to come. “I would be selling tankers and buying energy infrastructure,” he said.

Drewry’s Kapoor was also downbeat, and said, “I don’t see shipping equities doing as well as they did in the last decade. They will be underperformers.”

JP Morgan’s Png and Deutsche Bank’s Mehrotra did see some stocks that have been heavily sold down as being good potential buys.

Looking at Asian shipping stocks Png said that in both dry bulk and container shipping there were “good opportunities to pick-up names that have been oversold”.

Speaking at about the US market Mehrotra was more specific naming both Diana Shipping and Scorpio Bulkers as two companies they expect to double their stock prices in the next 12 – 18 months. Although in the case of Scorpio Bulkers he added that this was “not saying much given its at $1.60 today”.