Shipping Sector – Offering good value picks

This sector has remained quite lull during the previous few quarters. The industry is cyclic in nature but had never faced such a prolonged spell of gloom as it has in the last two years. During the previous year freight rates slumped, with excess fleet chasing shrinking cargo parcels. To make matters worse, overseas fund spigot turned dry, with some ship owners finding it difficult to even remain afloat. However things have dramatically improved since then and going forward the rates are expected to improve further in the coming months. The burgeoning Chinese trade and expectations of higher crude and petroleum prices are some of the factors supporting the market. The tanker markets which have been impacted by the OPEC production cuts and dwindling oil demand should recover once the oil consumption picks up and inventories are drawn down. As confidence in the nascent economic recovery in the west picks up both freight and tanker rates are likely to remain robust.

The sector has been in news due to the acquisition of Great Offshore by Bharati Shipyard. We recommend buying Bharati shipyard, ABG Shipyard, Great offshore, GE Shipping and Mercator lines. Most of them also offer good dividend yield and hence have good downside protection.

This sector has remained quite lull during the previous few quarters. The industry is cyclic in nature but had never faced such a prolonged spell of gloom as it has in the last two years. During the previous year freight rates slumped, with excess fleet chasing shrinking cargo parcels. To make matters worse, overseas fund spigot turned dry, with some ship owners finding it difficult to even remain afloat. However things have dramatically improved since then and going forward the rates are expected to improve further in the coming months. The burgeoning Chinese trade and expectations of higher crude and petroleum prices are some of the factors supporting the market. The tanker markets which have been impacted by the OPEC production cuts and dwindling oil demand should recover once the oil consumption picks up and inventories are drawn down. As confidence in the nascent economic recovery in the west picks up both freight and tanker rates are likely to remain robust.

The sector has been in news due to the acquisition of Great Offshore by Bharati Shipyard. We recommend buying Bharati shipyard, ABG Shipyard, Great offshore, GE Shipping and Mercator lines. Most of them also offer good dividend yield and hence have good downside protection.