If you are unlucky enough to have most of your investment portfolio tied up in Hong Kong-listed shipping stocks you are probably teetering on a ledge somewhere high up and running through various options.
The bank approved financial crisis (terms and conditions applied) took care of 2009, but by the end of the year a surge in demand caught the container shipping business by surprise.
Retailers went into an inventory replenishment frenzy and the containers filled with orders steamed across the Pacific. Container lines posted record profits in 2010 and there was a flurry of activity in the trading of shipping stocks.
The future seemed bright, the global financial crisis appeared over and life was back to normal. If only.
The promising start to this year petered out and a steady fall in business plunged carriers into the red by the third quarter. Here we are in the middle of November and all the lines are predicting losses this year.
That steady decline in profits was matched by falling stock prices for companies involved in the shipping business.
China Shipping Container Lines led the decline with its share price on the HKEx dropping from US$0.46 on January 3 to $0.17 a share today. Orient Overseas Interlational Ltd, parent of OOCL, fell 55 percent during the year from $10 in January to $4.4 per share this morning.
In the bulk business, China Shipping Development’s share price was $1.3 on January 3 and had halved to $0.6 a share by today. Sinotrans Shipping registered a modest-by-comparison drop of 36 percent during the year, but then it began trading a few years ago at a ridiculously overvalued price, anyway. Pacific Basin dropped from $0.6 a share on January 3 to $0.4 today.
The port operators fared better, but not by much. Cosco Pacific was down 35 percent from $1.8 in January to today’s $1.2; China Merchants Holding International’s price fell 30 percent during the year to $2.8 a share, and Hutchison Whampoa, parent of world’s number one port operator HPH, dropped by 20 percent to $8.7 a share this morning. The terminal operating division is just one pillar of Hutchison.
It may take a while before the shares stage any kind of reasonable recovery, but the best available option is probably to climb back in off the ledge, sit down at the computer and buy a few more shares.
Shipping and port stocks may not have reached rock bottom but they must be pretty close.