Hong Kong: Asian shipping company shares, the region’s best performers this year, are stalling on concerns that rising costs will hinder earnings growth. China Cosco Holdings Co., owner of Asia’s largest container line, has tumbled 25% this month from a record on 31 July. Neptune Orient Lines Ltd, which operates the region’s fourth-largest container line, has dropped 34% since peaking on 16 July. Its costs will rise 1% in the second half, twice as fast as in the first, on fuel, said UBS AG analyst Alex Chang in Hong Kong.
Energy costs have jumped more than 30% this year and surcharges to move containers in and out of ports are rising, undermining shipping lines’ efforts to stem two years of profit declines. The firms are also paying more for vessels as shipbuilders charge higher prices because of a flood of orders. Goldman, Sachs & Co. cut its recommendation on Asian shipping stocks last month.
Neptune Orient fell 9.4%, the biggest decline in more than two years, to close at S$4.06 (Rs108) in Singapore on Thursday. China Cosco plunged 13%, the largest drop since its shares started trading to HK$10.54 (Rs55) in Hong Kong. Shares of Hanjin Shipping slipped 8.8% to 43,800 won (Rs18,800) in Seoul.