COPENHAGEN: Ship owners have already a lot of things “on their plates”, in terms of figuring out future market prospects for shipping, ship price trends and thus, making their investment decisions, based on available liquidity and financing.
On top of that has come the latest market turbulence, originating from China’s stockmarket. In its latest weekly report, shipbroker Allied Shipbroking noted that “with the global stock markets still in turmoil and finding it difficult to come to terms with the recent shock inflicted over the past couple of weeks from the downfall of the Chinese stock market. The massive losses inflicted on the total market capitalisation of global equites has created a surge in volatility and has hit investor confidence beyond just the equity markets.
Commodity indices have hit their lowest level this century while they are currently close to where they stood in 1999. This latter has been in part due to the glut in supply in all major commodities, though the most recent drop is related more to the lack in confidence over the prospects of most of the BRICS economies which are some of the largest consumers.
According to Allied’s Head of Market Research & Asset Valuations Mr. George Lazaridis, “it is notable to point out that Chinese consumption of most of these raw-materials has been in part helping a balance in the global market and driving global growth in the absence of a strong market in the U.S. and Europe. This weakening in consumption of raw-materials is becoming evident in other emerging markets such as Brazil, which reported that it has slid into recessionary territory as its GDP contracted in the 3 months to June.
India, as has been mentioned here countless times, has been one of the only main emerging markets to show a stronger resilience over the recent market trends, partly thanks to the fact that it is also the only one out of the BRICS to have its economy fairly decoupled from that of China and if anything, more dependent on the U.S. and Europe, as it slowly takes up the role of the world’s main workshop.
Similar and to a lesser extent, South Africa and Turkey have also been markets which have proved to be fairly resistant to the downward pressures of recent weeks. Yet it is unlikely that putting all these economies together we would be able to see a similar contribution to global growth as that left behind by the lagging Chinese economy”, Lazaridis noted.
