Chinese Shipping Shares Drop on Reports of Gaza Cease-Fire Progress

Dow Jones07-08

By Jiahui Huang

Shares of Chinese shipping companies fell sharply on expectations of falling freight rates after Hamas reportedly signaled approval for a cease-fire in Gaza.

Orient Overseas (International) shares were 5.8% lower in Hong Kong by midday Monday, the biggest decliner among Hang Seng Index constituents. Cosco Shipping shed 8.5% and 5.2% in Hong Kong and Shanghai, respectively. Cosco Shipping Development and SITC International lost 6.7% and 4.35%, respectively, in Hong Kong.

The declines came after media reports over the weekend that Hamas had given its initial approval to a U.S.-backed phased cease-fire deal in Gaza and dropped a demand for Israel's commitment to end the war.

The possibility of the Middle East situation improving has fueled expectations that freight rates will begin dropping to preconflict levels, pressuring shipping stocks, Daiwa analyst Kelvin Lau said.

The share prices of Chinese shipping companies have risen significantly this year, thanks to substantially higher freight rates due to the Red Sea disruptions. Cosco Shipping's Hong Kong-listed shares have gained 57% so far this year, while Cosco Shipping Development has climbed 30%.

Analysts don't expect freight rates to return to predisruption levels immediately, but investors may be considering taking profits, Lau said.

The SCFIS (Europe) Futures Contract, a shipping-index-based futures, dropped 5.5%, with some major contracts falling by their daily limit, according to Wind data.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

July 08, 2024 00:22 ET (04:22 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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Cosco Shipping shed 8.5% and 5.2% in Hong Kong and Shanghai, respectively. Cosco Shipping Development and SITC International lost 6.7% and 4.35%, respectively, in Hong Kong. \n\n\n  The declines came after media reports over the weekend that Hamas had given its initial approval to a U.S.-backed phased cease-fire deal in Gaza and dropped a demand for Israel's commitment to end the war. \n\n\n  The possibility of the Middle East situation improving has fueled expectations that freight rates will begin dropping to preconflict levels, pressuring shipping stocks, Daiwa analyst Kelvin Lau said. \n\n\n  The share prices of Chinese shipping companies have risen significantly this year, thanks to substantially higher freight rates due to the Red Sea disruptions. 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