1999 Maritime Equity Outlook

Provided by ING Baring Furman Selz’s Equity Research Department

A look at the Overall Markets

Since our last Maritime update in the fall of 1998, the bleak fundamentals have remained flat at best. The confluence of a slowdown in worldwide economies and an oversupply of tonnage in each of the major shipping segments has placed significant downward pressure on the profitability of most shipping concerns globally. Our maritime stock price index (market capitalization weighted), shown on the following page, is representative of 10 domestic shipping stocks that span all sectors of the group. As indicated, the maritime index grossly under-performed the S&P 500 in 1998, falling 27.1% versus an increase of 26.7% in the S&P 500. Additionally, in the latest 12 months through February, the numbers are even more staggering with the shipping index dropping an egregious 36.2% compared with an 18.1% increase in the S&P 500 over last year’s levels. The bad news is, we expect the stocks in our universe to continue to under-perform the S&P 500 in the first half of 1999. The good news is that this could potentially create the most compelling buying opportunities for select names by tail-end 1999/early 2000 since 1991/2 (and more appropriately 1986/87).

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