Digesting the Boom – with Room for Dessert

Underpinned by the recovery of western economies and China’s continuous strong performance, the maritime industry has been enjoying an unprecedented boom over the past two-plus years. For the 74 public maritime companies covered by Marine Money’s rankings, the unweighted average TRS, or total returns to shareholders, jumped up from 12.48% in 2002 to 137.72% in 2003 and 70.55% in 2004 (see Figure 16). No other industry achieved such stock performance in the comparable period. More impressively, almost all the players in the maritime industry are making money. It has been a feast for everyone. However, for the first half of 2005, the unweighted average TRS of Marine Money’s 74 maritime companies dropped from 70.55% in 2004 to 20.53%. This is not much of a surprise to anyone in the business and really still a dramatic return, especially considering that it has come over only six months.

The data is compiled based on 74 companies in six sectors: bulk, tanker, liner, offshore, cruise ferry and multiservice. All six categories show the same trend: TRS has declined compared with last year, which reflects an obvious deceleration in stock price appreciation. From 2002 to 2005, the maritime industry TRS has demonstrated a classic bell curve, reflecting the industry’s cyclical nature. We believe, however, that the indication of a slowdown of the maritime industry’s bullish development is reflective of a shift in investor sentiment rather more than market rate realities.

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