I think there was some update on Bloomberg the last 2 days. Anyways, for each idea, there's always buy/sell calls. Thats how Bloomberg reporters/writers always reports their findings.
It can be conflicting/confusing. But these are news outlets, so its their job. ;)
It just happens that Baltic Index is that popular so there is more focus to watch it with the stocks, in fact if we explore closely, a lot of companies are affected by some kind of price index, eg user & producer of palm oil, the consumer companies may have to raise prices depending on the economic of their brands,on the flipside, the producer will be laughing to the bank, which side do we want to be? Well if one thinks that to be on the consumer side will be bleeding and returns low while to be on the producer side, we'll be thinking of the price coming down!!!!So how??
My point is that we have such situation all the time, infact in our life too, buy house here or there and evaluate all kind of things.
I think Maybulk is well managed, its link to PPB and the Kuok business empire will benefit it well, as the Kuok business is involved in import-export and processing of food staples, so Maybulk would not be short of business and I believe with all the weather distortions from global warming , crop of any kind will be affected, as the planters have not adjusted to the changes yet and the unpredictability of the weather. The food chain will get more important and as the world need to feed more people, so Maybulk will always play an important role in the chain.
It just happens that Baltic Index is that popular so there is more focus to watch it with the stocks, in fact if we explore closely, a lot of companies are affected by some kind of price index, eg user & producer of palm oil, the consumer companies may have to raise prices depending on the economic of their brands,on the flipside, the producer will be laughing to the bank, which side do we want to be? Well if one thinks that to be on the consumer side will be bleeding and returns low while to be on the producer side, we'll be thinking of the price coming down!!!!So how??
Warren,
Baltic Dry Index measures the drybulk shipping rates.
Now if the rates has 'peaked' or the rates are going down.. then... it doesn't auger well for the shippers, doesn't it?
HONG KONG: Hyundai Heavy Industries Co., the world's largest shipbuilder, led declines among shipyard stocks on concern of fewer orders for vessels this year after bulk rates fell the most since June 1989.
Hyundai Heavy dropped 6.6%, the biggest decline in almost five months, to close at 382,500 won. Unit Hyundai Mipo
Dockyard Co. declined 6.5%, the largest loss in two months, to 244,000 won.
Bulk rates plunged last week on concern economic slowdown in China, the world's biggest buyer of iron ore used to make steel, and the US may reduce trade demand for commodities and consumer goods. Demand from China, Asia's second-largest economy, last year helped lift fees to a record, prompting vessel orders.
“Investors are worried that with rates falling so much last week, shipping lines may pull back from ordering more vessels from shipyards,”said Lee Jae Won, an analyst at Tong Yang Investment Bank in Seoul.
“That would mean the momentum for new orders could come to an end this year.”
Lee has an “overweight” rating for South Korean shipyards.
The Baltic Dry Index, which measures shipping costs for commodities, fell 4.6 % on Jan 11 to 7,949.
“The index is often used by investors to track rates for the shipping industry,’’ Lee said.
“It seems investors have overreacted to the news.”
Strong demand from operators of vessels that carry iron ore, coal and consumer goods helped yards in South Korea to win record orders for a fifth straight year in 2007, stretching deliveries to as long as 2012.
Shipping lines including STX Pan Ocean Co. and Pacific Basin Shipping Ltd. spent a record US$179.8bil in new vessels in the first 11 months of last year, 40% more than US$124.4bil
invested for all of 2006, according to London-based Clarkson Plc, the world's biggest shipbroker.
Hyundai Heavy’s net income more than doubled to a record 434.7 billion won (US$464mil) in the third quarter, with sales climbing 19% to 3.73 trillion won.
Interesting to see that both BDI and Maybulk's share price has been on a decline since peaking in Oct/Nov 07.
Another example of cyclical investing I suppose, that you need to learn to sell after seeing the peak
I do see the importance in understanding the cyclical nature of Maybulk's earnings.
Maybulk shares rose to the sky due to the bullish impact of the BDI. Now the BDI is but correcting massively. Hence, the possibility of Maybulk's share price being impacted increases.
Same with plantation stocks... once the CPO euphoria corrects.. there should probably be a huge negative sentiment impact on the cpo stocks.
BDI price fell below the trendline yesterday.
Maybulk's income is definitely correlated to the BDI, so I'll be looking for some stability or rebound in BDI before even trying to say what price I will consider buying into it
