According to Allied’s Quantitative Analyst, Mr. Thomas Chasapis, “the question for us now is with regards to how immune the shipping industry can prove to be to these fundamental changes. We have used the TRIX (triple exponential average) metric derived (and equally weighted) from the asset price levels of 5-year-old units for the Capesize, Panamax and Supramax size segments for the dry bulk market, and VLCC, Suezmax and Aframax size segments for the tanker market. The TRIX shows the rate of change in a 15- period moving average that has been smoothed exponentially 3 times. The purpose of this trend analysis is not to point out any bullish or bearish trend but rather to highlight the recent alignment in trends between the different shipping asset markets despite where their respective freight earnings are currently. The cost of borrowing is already in a state of shift, with unknown results emerging in terms of economic growth, investment appetite, capital flow and risk parity. Amidst these systematic risks in global macros, despite what the graph below shows, the probability of a negative centerline crossover even on a short-term basis, has risen significantly”.
Mr. Chasapis added that “the above market view though does not necessarily support the idea of a bearish stance. In the dry bulk sector, things can be sustained on an upward path (albeit marginal), given the restructuring of the market that has taken place over the past couple of years. New rules in terms of momentum and floor-ceiling market levels are already in motion. On the other hand, in the case of the tanker sector, given its prolonged uninspiring freight market profile, things can shift more abruptly and sooner than most would expect. All-in-all, for the time being, we should be more alert regarding shifting idiosyncratic risks that could emerge within shipping sub-markets as a consequence of the current fast-paced hikes in interest rates”, Allied’s analyst concluded.
