Bulker shares in corrective week on Wall Street (6 Apr 2018)

Wall StreetPressure has remained on Capesize derivatives this week with May futures looking oversold, according to FIS analysts, who say the May-5TC spread is over­stretched at US$ 4,000. They warn upside moves will be more limited the longer that no type of not­able upward movement is seen in the indices. The Capesize index is still well in bearish territory, trad­ers observe, with technical resistance at US$ 9,304.

It was a corrective week for listed bulker companies on Wall Street with only a handful making any posi­tive gains. Indeed, with the exception of Eagle Bulk [EGLE], mounting a minor 1-2% week-on-week rise to US$ 4.9/share, most of the listed bulkers headed downward over the week. Most downgraded, argu­ably, was Navios Maritime Holdings [NM], shedding 13-14% over the week to settle at US$ 0.8/share. DryShips Inc. [DRYS] dropped 4% to US$3.5/share.

An exchange-traded fund for shipping futures was announced last week. The US-based Breakwave Dry Bulk Shipping ETF (BDRY) will be the first ex­change-traded product focused on freight futures in the dry bulk shipping market. BDRY is designed to use a so-called laddered strategy to purchase con­tracts while letting existing positions expire and settle in cash. The product will provide long expo­sure to dry bulk shipping using a portfolio of near-dated FFA contracts based on dry bulk indices. In essence, traders will be able to participate in the dry bulk derivatives market without having to trade the futures themselves, or so claims the fund, which has been created by a partnership between Breakwave Advisors and ETF Managers Group (ETFMG).

Following suit with the German and UK shipping banks, Italian shipping lender Banca Carige (based in Genoa) has put its portfolio for three shipping companies up for sale. The exposure of the three firms have an estimated combined value of US$ 750m and are loosely defined as ‘unlikely to pay’, a short step away from an official ‘non-performing’ designation. The loans, connected to Ignazio Messi­na & C., Finbeta and Scerni di Navigazione make up a share of shipping credit that the bank intends to offload before the end of the year. The value of Ignazio’s loans is estimated at about US$ 585m.

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