Dry Baltic Index

Posted by Kris | Sunday, October 26, 2008 | | 0 comments »

Copied this from www.maoxian.com :P

The dry baltic Index which at one time propelled local shipping stocks like Maybulk to loftier prices is now dropping like no tommorow.Look at the charts.  If i am not mistaken, Maybulk's high was around RM5.(now it is trading at RM2.360) It even survived the early onslaught of the bear market when the sub prime issue begun to implode. The shipping industry keep on buying and ordering new ships just to keep up with the high demand for shipping. There was a huge problematic traffic congestion issue at the international shipping ports during the bull market.

And now, when the Bear comes, shipping companies will surely have serious debt problems if the mismanaged their cash flow.Saddled with idling ships and high maintenance costs, the downtrend stock prices for shipping companies is a no brainer. Guess the management did not look ahead "far" enough.

If my memory serves me correctly, I think Maybulk is the only company that was selling ships during the Bull Market instead of buying them, netting a nice profit. Not sure about the status of this company nowadays, since i am not following the local KLSE for a long time.