Friday, September 14, 2012

The Shipping Conundrum - NOL

Today, NOL, on the back of a 2.75% day rise, had been removed as a component of the STI and replaced with the newly SGX-listed IHH trust. Changes will take effect on 24th Sept.

The news for shipping counters really just gets worse and worse, doesn't it? In the public focus is China's slowdown where the biggest hit industry has to be that of commodities. After all, when the biggest importer of goods starts to consume less, the first hit will be raw materials and food that has been fueling its meteoric rise in the last decade. And with Europe in deadlock, and US import/export imbalance swaying without much consensus, it is no wonder that the next most correlated industry - shipping - will also bear the brunt of this economic tide.

However so, it is both good and bad news that shipping industry has been battered since 2008 owing to a supply glut, much far ahead in time than last quarter's China hard/soft-landing quibble. In fact, prices of NOL, Cosco, Yangzijiang seemed so floored that China and US slow down in the last quarter almost failed to decrease its stock prices much further. 

Now, with investors coming in to buy on the cheap, as some people have started to buzz about, shipping counters are soon to be in the spotlight again as the 'cheap buy'. 
Is it really the cheap buy?


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