Transport Sector, China and Asia-focused Research

Charles De Trenck

Thematic (Sector/Industry)

My father, an old school broker, banker and adviser for over 40 years, used to tell me as a child that one of the most important relationships to follow was the triangular relationship between the dollar, gold and oil. I always kept the lesson close to heart, and it has been my go to for market reality tests again and again. Over the years I have added equities to the relationship. Perhaps also because they mean a little more today. I don’t know. It was this constant triangulation of price and value that got me into the EUR around 2000 and out again a few years back. And for better or worse, that has kept my equity exposure low in recent years. In 2010-11, however the triangulation led to some insights on gold versus equities which panned out clearly enough. But the analysis now shows something just as volatile if not more.I mapped out some of the relationships in two easy charts going back to the 1960s in order to view the big swings. ... Added at the end are some quick updates on credit watch names making their way into equities. TK Group companies just got a high profile lashing from Morgan Stanley (despite an embarrassing target price change!)

My father, an old school broker, banker and adviser for over 40 years, used to tell me as a child that one of the most important relationships to follow was the triangular relationship between the dollar, gold and oil. I always kept the lesson close to heart, and it has been my go to for market reality tests again and again. Over the years I have added equities to the relationship. Perhaps also because they mean a little more today. I don’t know. It was this constant triangulation of price and value that got me into the EUR around 2000 and out again a few years back. And for better or worse, that has kept my equity exposure low in recent years. In 2010-11, however the triangulation led to some insights on gold versus equities which panned out clearly enough. But the analysis now shows something just as volatile if not more.I mapped out some of the relationships in two easy charts going back to the 1960s in order to view the big swings. ... Added at the end are some quick updates on credit watch names making their way into equities. TK Group companies just got a high profile lashing from Morgan Stanley (despite an embarrassing target price change!)

Triangulating Oil Back to 60s (And Shipping Credit Watch Updates...)

Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

<figure class="editor-figure">Moderation likely but it ain't over yet<img src="https://static-prod.smartkarma.com/images/media/000/005/034/original/Tank%20Price%20Performance.JPG?1453075386" class="editor-image img-responsive" data-smartkarma-image-id="5034"></figure> Source: Bloomberg, DMER<ul>
<li>The uptrend in share prices that started in the tail end of FY14 continued in 2015 mainly on prospects of improved profitability of companies in a demand-driven market. The market capitalisation of DMER’s tanker shipping index moved up by ~USD 1.8bn because of the upsurge in stock prices and generated a return of ~27% during the year.</li>
<li>
Nordic American Tanker enjoyed the benefits of full exposure to the spot market as day rates remained…</li>
</ul>

Moderation likely but it ain't over yet Source: Bloomberg, DMER
The uptrend in share prices that started in the tail end of FY14 continued in 2015 mainly on prospects of improved profitability of companies in a demand-driven market. The market capitalisation of DMER’s tanker shipping index moved up by ~USD 1.8bn because of the upsurge in stock prices and generated a return of ~27% during the year.

Nordic American Tanker enjoyed the benefits of full exposure to the spot market as day rates remained…


Tanker Shipping-2016 - Moderation Likely but It Ain't over Yet, The Preferred Investment In Shipping

2015: Investors catch a falling knife disguised as pocket of value<img src="https://static-prod.smartkarma.com/images/media/000/004/981/original/Price%20Performance.JPG?1452658223" class="editor-image img-responsive" data-smartkarma-image-id="4981"> Source: Bloomberg, DMER<ul>
<li>Investors suffered massive wealth erosion in 2015, as share prices of dry bulk companies kept tumbling during the year. DMER’s shipping index, which is based on the market cap of leading dry bulk companies, was down ~43% in 2015.</li>
<li>
Dry bulk owners were confronted with weak shipping demand because of the slowdown in Chinese economy, which resulted in huge losses. BDI touched record lows of 415 at the onset of…</li>
</ul>

2015: Investors catch a falling knife disguised as pocket of value Source: Bloomberg, DMER
Investors suffered massive wealth erosion in 2015, as share prices of dry bulk companies kept tumbling during the year. DMER’s shipping index, which is based on the market cap of leading dry bulk companies, was down ~43% in 2015.

Dry bulk owners were confronted with weak shipping demand because of the slowdown in Chinese economy, which resulted in huge losses. BDI touched record lows of 415 at the onset of…


Dry Bulk Shipping - 2016 - Falling Knife Disguised as Pocket of Value ?

As a response to my note yesterday on where we are in energy's long bottoming out process, we had a good long reply from a long time energy transport industry executive, who kindly shared his feedback and insight. Further detailed below.&nbsp;

As a response to my note yesterday on where we are in energy's long bottoming out process, we had a good long reply from a long time energy transport industry executive, who kindly shared his feedback and insight. Further detailed below.&nbsp;

Further Insight on History of Big Misses in Oil and Energy (Long Response)

The Horrible Very Bad Day for MLPs and Energy... The Story ContinuesThe rebound/sell-off pattern is exactly as expected so far. The amplitudes appear a little greater than anticipated, but on the whole they are not surprising given the years of commodities rallies we experienced on the back of China and easy central bank money. Back on 29 Sept in my note &ldquo;Commodities: The Harder They Come, The Harder They Fall...&rdquo; the main message was be ready to trade the carnage, within an overall classic pattern. This followed an earlier note on the Horrible things that awaited MLPs I wrote back around 6 August.We got these trades, and flagged the trimming of positions that was needed in some of the names we picked. In August it made sense to expect that MLPs were looking bad and we should wait for blood on the streets. And we saw panic selling again in September before rebounds... and in the last week-- sheer panic selling. What follows is a quick review of issues/drivers, especially lessons we have seen in past, and what we can expect going forward.

The Horrible Very Bad Day for MLPs and Energy... The Story ContinuesThe rebound/sell-off pattern is exactly as expected so far. The amplitudes appear a little greater than anticipated, but on the whole they are not surprising given the years of commodities rallies we experienced on the back of China and easy central bank money. Back on 29 Sept in my note &ldquo;Commodities: The Harder They Come, The Harder They Fall...&rdquo; the main message was be ready to trade the carnage, within an overall classic pattern. This followed an earlier note on the Horrible things that awaited MLPs I wrote back around 6 August.We got these trades, and flagged the trimming of positions that was needed in some of the names we picked. In August it made sense to expect that MLPs were looking bad and we should wait for blood on the streets. And we saw panic selling again in September before rebounds... and in the last week-- sheer panic selling. What follows is a quick review of issues/drivers, especially lessons we have seen in past, and what we can expect going forward.

Understanding the Trading Pattern in Energy Related (And the Poor Industry Forecasting Skills)

United States

Johnson Controls International plc (JCI) provides building products and technology solutions. The Company offers air systems, building management, HVAC controls, security, and fire safety solutions. JCI serves customers worldwide.

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Tyco International (TYC US)

Triangulating Oil Back to 60s (And Shipping Credit Watch Updates...)

My father, an old school broker, banker and adviser for over 40 years, used to tell me as a child that one of the most important relationships to...

Charles De Trenck

Tanker Shipping-2016 - Moderation Likely but It Ain't over Yet, The Preferred Investment In Shipping

Moderation likely but it ain't over yet Source: Bloomberg, DMER The uptrend in share prices that started in the tail end of FY14 continued in 2015...

Drewry Maritime Financial Research

Dry Bulk Shipping - 2016 - Falling Knife Disguised as Pocket of Value ?

2015: Investors catch a falling knife disguised as pocket of value Source: Bloomberg, DMER Investors suffered massive wealth erosion in 2015, as...

Drewry Maritime Financial Research

Further Insight on History of Big Misses in Oil and Energy (Long Response)

As a response to my note yesterday on where we are in energy's long bottoming out process, we had a good long reply from a long time energy...

Charles De Trenck

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Triangulating Oil Back to 60s (And Shipping Credit Watch Updates...)

My father, an old school broker, banker and adviser for over 40 years, used to tell me as a child that one of the most important relationships to...

Charles De Trenck

Tanker Shipping-2016 - Moderation Likely but It Ain't over Yet, The Preferred Investment In Shipping

Moderation likely but it ain't over yet Source: Bloomberg, DMER The uptrend in share prices that started in the tail end of FY14 continued in 2015...

Drewry Maritime Financial Research

Dry Bulk Shipping - 2016 - Falling Knife Disguised as Pocket of Value ?

2015: Investors catch a falling knife disguised as pocket of value Source: Bloomberg, DMER Investors suffered massive wealth erosion in 2015, as...

Drewry Maritime Financial Research

Further Insight on History of Big Misses in Oil and Energy (Long Response)

As a response to my note yesterday on where we are in energy's long bottoming out process, we had a good long reply from a long time energy...

Charles De Trenck

Understanding the Trading Pattern in Energy Related (And the Poor Industry Forecasting Skills)

The Horrible Very Bad Day for MLPs and Energy... The Story ContinuesThe rebound/sell-off pattern is exactly as expected so far. The amplitudes...

Charles De Trenck