By Yifan Wang
Shares of Cosco Shipping Energy Transportation Co. Ltd. fell sharply in both Hong Kong and China markets on Wednesday, following an overnight drop in crude prices and an increasingly dim outlook for energy demand.
The Chinese oil tanker company’s Hong Kong-listed stock was 8.4% lower at the mid-day trading break, while its Shanghai-traded shares were last 9.7% weaker.
The shares’ slide came after investors’ fears of slowing energy demand and an economic recession in the U.S. sent the benchmark U.S. oil price below $100 a barrel overnight, for the first time since May.
Both oil prices and fuel tanker rates have turned lower after surging earlier this year as the war in Ukraine disrupted supply lines and global post-pandemic reopening boosted demand. But fast inflation, slowing consumption and aggressive interest rate increases across the globe have pulled down traders’ forecasts for oil demand and consequently weighed on oil tanker rates.
Non-energy shipping companies are also under increasing pressure, as trade activity is expected to decline from their pandemic peak levels, with consumers shifting their spending to local services from physical goods as pandemic-related curbs are lifted.
“The growing concerns over a global recession and consumption shift back to services have been dominating our debates with investors [in Asia’s shipping sector] over the past few months,” Citi analysts said in a recent note.
In Hong Kong’s Wednesday trade, Sinotrans Ltd. was last down 2.6% and Cosco Shipping Holdings Co. was 2.7% lower.
Write to Yifan Wang at [email protected]
(END) Dow Jones Newswires
July 06, 2022 00:41 ET (04:41 GMT)
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