It has been a tough year to be in the stock market, with the broader US exchanges officially sinking into bear territory, the S&P 500 down 20% and the small-cap Russell 2000 index falling 30%.
But in a climate of rising interest rates, inflation and fears of a global recession, shipping stocks have done better than the broader market.
Where was the most money to be made in New York-listed marine stocks in the year’s first half?
Look no further than the long-beleaguered tanker sector, where a group of seven names surveyed by Streetwise rose an average 63% up to closing on 30 June.
The biggest moves came in clean product carriers, where market giant Scorpio Tankers led all shipping equities with a 163% rise from $13.11 to $34.51 over the period.
Competitor Ardmore Shipping of Ireland jumped 107% from $3.36 to $6.97 as product tanker owners benefited from improved refining margins and cargo dislocations from Russia’s invasion of Ukraine.
The Baltic Clean Tanker Index (BCTI) saw a 74.7% sequential increase during the second quarter, while the Baltic Dirty Tanker Index (BDTI) retreated 4.2%, according to a research note by Liam Burke of B Riley Securities.
That is not to say that crude stocks did badly in the first half. Belgian tanker giant Euronav fared best with a 34% rise to $11.93 from $8.93, although the Hugo De Stoop-led shipowner clearly benefited from the buzz surrounding its prospective merger with John Fredriksen’s Frontline.
Frontline saw less of an impact with an 18% rise to $8.86 from $7.54, but this was also in line with another crude specialist, VLCC owner DHT Holdings, which gained 17% to $6.13 from $5.24.
Shipowners with both dirty and clean tankers in their fleets saw some increased benefit.
Teekay Tankers ran up 25% to $13.84 from $11.11, while New York-based International Seaways surged 21% to $18.04 from $14.88.
All told, each of the seven tanker owners saw their share price increase at the close of the past quarter compared to the end of the first.
In terms of momentum for shipping stocks, this is where the good news ends.
The five dry bulk names surveyed by Streetwise did all manage share price increases through the first two quarters, with an average of 14.5%. But every one of them lost ground from the end of March, with an average decline of 15%.
The four container ship listings reviewed are all down on the year to 30 June, by an average of nearly 17%. Each gained share value over the first quarter but lost the gains – and more – over the past three months, with an average drop of 34%.
Leading the bulker names was Greek owner Diana Shipping, whose conservative charter-based approach could give comfort to investors wary of a rapid dive in dry rates owing to potential demand destruction.
Diana has gained 21% to $4.79 from $3.97 over the half year. That is ahead of such peers as Golden Ocean Group, which rose 22%; Genco Shipping & Trading, with an 18% gain; Star Bulk Carriers, whose shares jumped 16%; and Eagle Bulk Shipping, with a 12% uptick.
Golden Ocean held up best over the past quarter, losing only 3% of its value.
It was a bloody quarter for the container ship names with a slowdown in the world economy set to draw the curtain on a record rates run.
Greek lessor Danaos suffered most with a 38% decline in the quarter to $63.10 from $102.58. But the pain was shared with Israeli liner company Zim falling 35% from $72.83 to $47.23, Seaspan Corp parent Atlas down 31% from $15.54 to $10.71 and Greece’s Costamare also down 31% from $17.44 to $12.10.
Volatility has continued to rule the broader stock market since the quarter’s end with much the same for shipping shares, but B Riley’s Burke told clients he sees further room for tanker shares to run.
“Our view is that the sector is in a relatively early stage of recovery and there is more upside to the shares of tanker operators with crude tanker rates seeing further recovery in the second half of 2022,” he wrote.
More shipping finance news
US-listed tanker owner International Seaways is positioning itself for a sector recovery by cutting its interest burden, redeeming the outstanding $25m of the 8.5% senior notes due in 2023. Click here to read.
Singapore-based investment management and financial advisory firm Transport Capital has spread its wings to the European financial and commodity trading hub of Geneva with the addition of ship finance veteran Sebastian Wittgenstein. Click here to read.
London-based Avenir LNG has filled its vacant chief financial officer role by promoting from within, lifting Abigail Baltar to the role at the small-scale LNG carrier owner. Click here to read.
