In International Shipping News 18/11/2016
Shipping stocks soared again Thursday, as a rally that was triggered by bears fleeing and manic day-trading has morphed into a stampede of bulls.
The top 5 biggest percentage gainers in premarket trade were all companies in the shipping business.
Sino-Global Shipping America Ltd.’s stock topped the list, nearly doubling in active trade toward the highest open in 8 1/2 years, after already climbing nearly seven fold in the past week.
Diana Containerships Inc. shares shot up 40% ahead of the open, after soaring more than five fold over the previous two sessions.
In comparison, futures for the S&P 500 were little changed.
“While we believe retail momentum and short covering likely got this trade going, given the sheer size of the volume and the continued (relentless) pricing movements, we believe momentum-based algorithms (quant trading) are likely a very significant factor/catalyst at this point,” analyst Michael Webber at Wells Fargo wrote in an emailed note to clients.
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On Wednesday, trading volume in Sino-Global was 42.5 million shares, compared with the full-day average over the past 30 days of 1.9 million shares, according to FactSet. About 19.1 million Diana Containerships shares traded on Wednesday, compared with the daily average of 832,000 shares.
Among other early movers, shares of Global Ship Lease Inc. rallied 39%, of Euroseas Ltd. gained 27%, of TOP Ships Ltd. rose 26%, of Navios Maritime Partners L.P. hiked up 20% and of Seanergy Maritime Holdings Corp. climbed 15%.
Wells Fargo said there is some concern that the recent surge in shipping stocks is just a “quant driven flash (esque) bubble,” but he also believes the troubled sector provides an opportunity for longer-term investors once the market settles down.
“While we believe these pricing movements are still too severe [to] get in front of on the short side (at least for us), we do think there will be a material flip side to his trade,” Webber wrote. “Ultimately, we think they’ll give a lot of this back…but probably not all of it, as longer-term prospects have likely improved to at least some degree.”
Source: MarketWatch
