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Goldman downgrades Asian bulk operators

Goldman downgrades Asian bulk operators

Hong Kong: Bulk players in Asia had a harsh day at the bourses across the region yesterday following a negative report from a US investment bank. Goldman Sachs downgraded shares in China COSCO, the country's largest shipping firm, to a sell rating from neutral on Monday, citing an oversupply of freight capacity in coming years and weaker expectations for 2009 and 2010.
Shares in China COSCO lost 1.7 percent after the report, underperforming a 0.6 percent gain on the index for Chinese shares listed in Hong Kong.
The U.S. investment bank, which also downgraded STX Pan Ocean, Malaysian Bulk Carriers on Monday to sell from neutral, said freight rates will decline with the global capesize fleet set to double by 2011.
"We advise investors to sell bulker stocks now, well ahead of the correction in the freight market and decline in earnings that we anticipate from 2009 onwards," the bank said in a research report on Monday.
Goldman cut Pacific Basin to neutral from buy and sent the stock down 2.8 percent.
"We expect the BDI (Baltic Dry Index) to decline 40 percent year on year in 2009 and a further 47 percent in 2010," it added.
But there are bright spots among listed Asian bulkers.
Goldman upgraded China Shipping Development's yuan denominated A shares to buy from neutral as it is more defensive with 60 percent of its revenue from domestic shipping. It also upgraded Precious Shipping. [29/7/08]

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