Goldman downgrades China Cosco
China Cosco Holdings Co, the world's largest operator of iron-ore and coal ships, and STX Pan Ocean Co were downgraded by Goldman Sachs Group Inc on concerns that rates will fall as more vessels enter service.
Less confidence: The Hong Kong-listed shares of the world's largest operator of iron-ore and coal ships were also added to the bank's conviction sell list
The two shipping lines, Malaysian Bulk Carriers Bhd and U-Ming Marine Transport Corp were all cut to 'sell' from 'neutral', analysts Tom Kim and Edman Wong said in a note to clients yesterday. Pacific Basin Shipping Ltd was downgraded to 'neutral' from 'buy'. China Cosco's Hong Kong-listed shares were also added to the bank's conviction sell list.
The Baltic Dry Index, a measure of rates for shipping coal and iron ore, has more than doubled in the past three years because of China's demand for raw materials. Fees may now fall for the next two years because of a glut of new vessels, including enough Capesize ships to double the global fleet by 2011, said the Goldman analysts.
This 'implies very significant downside risk to the freight market', they said. The Baltic Dry Index is likely to fall 40 per cent next year and 47 per cent the year after, they said.
The bank upgraded Precious Shipping Pcl and China Shipping Development Co's Shanghai-listed shares to 'buy' from 'neutral', following recent declines. China Shipping was also added to Goldman's conviction buy list. The company earns about 60 per cent of sales from domestic shipments, shielding it from global trends, the analysts said.
Less confidence: The Hong Kong-listed shares of the world's largest operator of iron-ore and coal ships were also added to the bank's conviction sell list
The two shipping lines, Malaysian Bulk Carriers Bhd and U-Ming Marine Transport Corp were all cut to 'sell' from 'neutral', analysts Tom Kim and Edman Wong said in a note to clients yesterday. Pacific Basin Shipping Ltd was downgraded to 'neutral' from 'buy'. China Cosco's Hong Kong-listed shares were also added to the bank's conviction sell list.
The Baltic Dry Index, a measure of rates for shipping coal and iron ore, has more than doubled in the past three years because of China's demand for raw materials. Fees may now fall for the next two years because of a glut of new vessels, including enough Capesize ships to double the global fleet by 2011, said the Goldman analysts.
This 'implies very significant downside risk to the freight market', they said. The Baltic Dry Index is likely to fall 40 per cent next year and 47 per cent the year after, they said.
The bank upgraded Precious Shipping Pcl and China Shipping Development Co's Shanghai-listed shares to 'buy' from 'neutral', following recent declines. China Shipping was also added to Goldman's conviction buy list. The company earns about 60 per cent of sales from domestic shipments, shielding it from global trends, the analysts said.