Shipping stocks

The Korea Shipowners' Association said it may set up an asset management company to buy vessels from cash- strapped shipping lines as trade slows amid the global financial crisis.

STX Pan Ocean Co. (STX SP), South Korea's largest bulk- shipping line, decreased 2.5 cents, or 3.2 percent, to 76 Singapore cents. Neptune Orient Lines Ltd. (NOL SP), Southeast Asia's biggest container carrier, declined 4 cents, or 3.9 percent, to 99 Singapore cents.

Downside looks limited at this juncture

by KEN TAI CHEE MING,
technical analyst
KELive Research (21 Oct)

But the long-term downtrend for ST Index remains

OUR long-term view of the Straits Times Index (STI) has not changed; we maintain that the STI will likely consolidate around 1,665. For short-term traders, a trading window may now open up, given new peaks attained by the VIX index, which measures expectations of near-term market volatility.

Since the VIX index was made available by Prof Robert E Whaley, it has never exceeded 80 points. Even in crisis years such as 1998 and 2001, the VIX only managed to hit 49. Our optimism for a bear rally occurring is also supported by several technical indicators.

The RSI moved into an extreme oversold range in the first week of October. If the RSI holds above 19, a bullish divergence will be formed.

At a secondary level, the plus directional movement indicator remains below the minus directional movement indicator. The ADX is also declining, suggesting that negative momentum is easing.

In all, we believe that the downside is limited at this juncture as negative news is priced into the market, at least in terms of the economic fallout from the credit crunch.

Notwithstanding that, the long-term downtrend is not over. As the recession gets underway, the market will again adjust its sentiment based on the state of the economic data.

As oil and commodities trend lower, related stocks are also reflecting the downtrend. We see further weakness in STX Pan Ocean and Mercator as the Baltic Dry Index goes near six-year lows.

-Research Report by KEN TAI CHEE MING,
technical analyst
KELive Research (21 Oct)

Marine Sector Research Report

by DBS Group Research (20 Aug)

EARNINGS season in H1 2008 has reinforced positive outlook for rig builders, as well as oil and gas service and equipment suppliers. The rig builders, as well as oil and gas service and equipment players, have to-date delivered collectively stronger than expected H1 2008 report cards, underscoring their ability to ride on the positive sector outlook and protect profit margins despite raw material price concerns and weak US dollar.

Indeed, SGX-listed Singapore yards, and oil and gas service and equipment players' earnings have escaped the concerns earlier in the year unscathed; with new orders holding up, and ironically, US dollar rebounding and raw material price concerns easing recently. The exceptions were SGX-listed Chinese yards' earlier-than-expected dip in profit margins, which we had warned since mid-Q1 2008.

Undiscerning selldown in share prices in line with general market weakness has created buying opportunities. In our opinion, the earnings for most SGX-listed Singapore yards and oil and gas service and equipment suppliers have caught up with their share price valuations since early 2008, and the scenario has now reversed for the current depressed share prices to rebound, underpinned by the firm industry fundamentals and successful business execution.

Easing oil prices are positive for the durability of oil and gas industry up-cycle. We have repeatedly mentioned since last August that too high an oil price may result in demand destruction and harm the orderbook replenishment opportunities of stocks exposed to the booming offshore segment.

While the equity market sees the recent cooling off in crude oil price negatively, we are taking the view that the recent retracement in oil prices is reducing the risk of demand destruction and inflationary pressures. This is positive for more new order wins ahead.

This is also in line with rig builders' and oil and gas service and equipment suppliers' feedback that oil price at US$70 per barrel is a good level for their business outlook.

Sembcorp Marine is our top pick among the yards; with price catalyst coming from a possible record level of order wins this year and improving margins from successful execution of its record order book.

Swiber Holdings and Ezra Holding remain our top picks among the oil and gas service and equipment suppliers, as both companies have strong market positioning to ride on the increasing shift to production phases for offshore oil fields.

-Research Report by DBS Group Research (20 Aug)

STX Pan Ocean 250708

STX Pan Ocean managed to recover to trade above the 2.75 support (blue ...), but it is still capped byt the downtrend resistance (upp pink) and the 2.87 resistance pink --).

STX Pan Ocean also traded below the uptrend support (low green) before recovering to close just above the support today.

If STX Pan Ocean fails to break the 2.87 resistance, we could see it trading sideways, supported by the 2.75 support (blue ...).

However, if STX Pan Ocean breaks the 2.75 support, smiliar to what happened on 30 jun, we could see history repeating itself.



For monday :

Support @ 2.83 (upp pink), 2.75 (blue ...), 2.66 (low red), 2.64 (low pink), 2.62 (mid blue, red ...), 2.52 (red --)

Resistance @ 2.87 (low green, pink --), 2.90 (upp blue), 2.95 (green ...), 3.017 (mid red), 3.065 (upp green)

STX Pan Ocean 110708

After closing right on the long term downtrend support (low red) on 4 jul, STX Pan Ocean staged a typical dramatic recovery the next trading day, coming to within touching distance of the 1st downtrend resistance (mid pink) and 2.87 neckline (pink --).

From here, there could be 2 ways STX Pan Ocean may continue - trading sideways, mirroring a pattern similar to the 28 mar to 14 apr period, and then exploding upwards.

For this scenario to happen, STX Pan Ocean would at least have to trade above the 2.75 support (blue ...) next week, and break the 1st downtrend resistance (mid pink). The upside would probably be limited by the 2.87 resistance (pink --). Volume would also have to start picking up.

Or, we could see STX Pan Ocean's trading pattern taking yet another dramatic twist downwards, similar to the pattern from 26 may to 6 jun. This scenario would probably take place if STX Pan Ocean breaks the 2.75 support (blue ...) as well as the uptrend support (low blue).

If STX Pan Ocean breaks the 2.75 support (blue ...), there could still be a possibility for it to trade sideways, between the 2.75 neckline and 2.62 support (red ...). If the 2.62 support breaks too, we could see STX Pan Ocean testing the 2.52 support (red --).



For monday :

Support @ 2.75 (blue ...), 2.65 (low blue), 2.62 (red ...), 2.52 (red --), 2.45 (green --), 2.41 (low pink), 2.38 (blue --), 2.32 (low red), 2.28 (pink ...)

Resistance @ 2.85 (mid pink), 2.87 (pink --), 2.93 (upp blue), 2.95 (green ...), 3.03 (mid red), 3.05 (upp pink)

Hope you find my analysis helpful. Thank you for your support !!

STX Pan Ocean 040708

After forming a multiple top (4 tops) from end apr to early jun, STX Pan Ocean finally broke the 2.95 neckline (green ...) on 13 jun. STX Pan Ocean then traded sideways along the 2.75 level (blue ...) before taking a dive again on 1 jul.

STX Pan Ocean tested 2 downtrend supports (low pink, low red) before closing right on the long term downtrend support (low red).

If STX Pan Ocean breaks the long term downtrend support (low red), the next support, based on volume distribution, would be around the 2.28 level (pink ...). And if that breaks as well, we could see STX Pan Ocean hitting the 22 jan low of 2.09 soon.



For monday :

Support @ 2.32 (low red), 2.28 (low pink, pink ...), 2.17, 2.09
Resistance @ 2.38 (blue --), 2.45 (green --), 2.52 (mid pink), 2.62 (low blue, red ...), 2.75 (blue ...)

Hope you find my analysis helpful. Thank you for your support !!

STX Pan Ocean 130608

Another typical dramatic week for STX Pan Ocean. From its peak of 4.00 on 20 may to the low of 2.70 today, STX Pan Ocean managed to shed 1.30 in less than a month, breaking a few important support levels along the way.

Will STX Pan Ocean hit the same lows as it did in mar? It's possible, if STX Pan Ocean breaks the 2.63 support (red ...). But I would not be surprised if STX Pan Ocean decides to fool everyone again and goes an upward spiral.



For monday :

Support @ 2.694 (low red), 2.63 (red ...), 2.60 (low red --), 2.50, 2.45, 2.32
Resistance @ 2.84 (mid red --), 2.90 (pink --), 2.94 (mid red), 2.97 (low blue), 3.05 (green --), 3.18 (blue --)

Hope you find my analysis helpful. Thank you for your support !!

STX Pan Ocean 300508

STX Pan Ocean has now recovered to where it was a week ago, up from a low of 3.10 on 26 may. We also saw STX Pan Ocean breaking the downtrend resistance (mid red), and 3.47 resistance (red --) yesterday (29 may).

However, the rise this week was accompanied by lower volume each day. So it remains to be seen if STX Pan Ocean can maintain trading above the 3.47 level (red --). We might also see STX Pan Ocean trading sideways, between the 3.47 (red --) and 3.53 (pink --) levels.

If STX Pan Oceans breaks the downtrend support (mid red), we could see it testing the 3.36 support (blue ...) again.



For monday :

Support @ 3.47 (red --), 3.44 (low red), 3.427 (mid blue), 3.36 (blue ...), 3.26 (green ...)
Resistance @ 3.53 (pink --), 3.54 (mid red), 3.575 (upp blue), 3.65 (green --), 3.82 (upp red)

Good Luck !!

STX Pan Ocean 270508

What a start to the week for STX Pan Ocean. If you have been following STX Pan Ocean long enough, you would know that such roller-coaster rides are nothing unusual.

STX Pan Ocean started off the week by opening below the long term downtrend support (low red), going on to break the 3.26 support (green ...) and 3.18 support (blue --) before settling down for the day just above the 3.26 support.

Today, STX Pan Ocean completely reversed the downtrend. Opening just below the 3.26 support (green ...) before going on to break long term downtrend resistance (low red) and 3.36 resistance level (blue ...).

If STX Pan Oceans opens tomorrow above the 3.36 neckline (blue ...) we might see it going for another resistance breaking run up again.



For tomorrow :

Support @ 3.36 (blue ...), 3.30 (low red), 3.26 (green ...), 3.18 (blue --)
Resistance @ 3.406 (low blue), 3.455 (mid red), 3.47 (red --), 3.53 (pink --)

Good Luck !!

STX Pan Ocean 230508

After opening right on the 3.47 support (red --), STX Pan Ocean started trading above 3.53 resistance (pink --), before softening to break below the 3.47 support and long term downtrend support (mid red).

STX Pan Ocean even went on to break, and closed the day below, the 3.36 support (blue ...).

What a week it has been for STX Pan Ocean ! Started the week testing the 4.00 level, and ended the week breaking the 3.36 support.

If you look at its trading patterns since 21 apr (or even earlier), you'd find that such ups and downs are not unusual for STX Pan Ocean.

If STX Pan Ocean breaks the long term downtrend support (low red), we could see it testing the 3.26 support (green ...) and 3.18 support (blue --).

For all you know, we could see STX Pan Ocean testing the long term downtrend support (low red), and then rebounding up to test the 3.47 resistance (red --) and 3.53 resistance (pink --).



For monday :

Support @ 3.308 (low red), 3.26 (green ...), 3.18 (blue --).
Resistance @ 3.46 (mid red), 3.47 (red --), 3.53 (pink --), 3.60 (upp blue), 3.65 (green --)

Good Luck !!

STX Pan Ocean 220508

After hitting a high of 4.00 on 20 may, STX Pan Ocean gapped down during the last 2 trading days. Yesterday, STX Pan Ocean broke the uptrend resistance (upp blue). Today, it broke the uptrend support (low blue).

STX Pan Ocean also came very close to testing the long term downtrend support (mid red). STX Pan Ocean closed on the 3.53 volume support (pink --).

If STX Pan Ocean breaks the 3.53 support (pink --) again tomorrow, the next support would be around 3.47, based on the volume distribution.



For tomorrow :

Support @ 3.47, 3.46 (low red), 3.36
Resistance @ 3.55, 3.58, 3.63, 3.65 (green --), 3.69 (low blue)

STX Pan Ocean 250408

Not only did STX Pan Ocean break the 3.34 resistance (pink --) on 21 apr, it also broke the uptrend resistance (upp blue).

STX Pan Ocean also broke the 3.62 resistance (green --) on 23 apr, and seems to have some temporary support at that level too.

The volume during the break out from 3.34 this week wasn't high compared to the dramatic rise at the beginning of the year. So we might see some profit taking for STX Pan Ocean this week.

If STX Pan Ocean fails to hold onto the 3.62 support, we might see it dropping back into the blue channel, with support probably around the 3.50 level.

If STX Pan Ocean trade sideways, keeping above the 3.62 support at the same time, we could see it testing the long term downtrend resistance (upp red) next week, or the week after.



For monday :

Support @ 3.62 (green --), 3.58 (low green), 3.52 (upp blue), 3.48 (low red), 3.34 (pink --)
Resistance @ 3.83 (upp red), 3.87 (upp green), 3.98

Good Luck !!

STX Pan Ocean Research Report

by CIMB-GK (25 April)

WE REAFFIRM our bullish expectations for the global dry bulk sector and forecast an average of 8,000 points for the Baltic Dry Index this year against 7,076 points last year, although freight rates will be more volatile as the gap in supply narrows.

Maintain 'overweight' on the dry-bulk sector: We believe that share prices of dry-bulk companies will do well particularly in H2 2008, with the key catalyst being stronger momentum on dry freight rates as the supply of iron ore and coal accelerates.

We are confident that demand will continue to be strong and vessel supply manageable. The threat of conversions is more bark than bite, while delivery delays and order cancellations may help reduce supply growth on the margins.

Our new target is based on a 20 per cent premium to our sum-of-the-parts valuation of $3.60, fusing the market value of its existing fleet and newbuildings, with a four times PE valuation for its chartered-in earnings, and the market value of its holding in Korea Express.

We have imputed a 20 per cent premium because STX Pan Ocean's share price is historically highly correlated to the momentum in dry-bulk freight rates. We did not previously input a premium. Earnings estimates remain unchanged.

- Research Report by CIMB-GK (25 April)

STX Pan Ocean 180408

STX Pan Ocean broke the long term downtrend resistance (upp red) on 15 apr. Thereafter, STX Pan Ocean traded above the 3.14 neckline (red --) but not too convincingly.

However, we can see that since the low on 22 jan, the subsequent lows of STX Pan Ocean have been higher. And STX Pan Ocean is also currently trading in an uptrend (blue).

If STX Pan Ocean can maintain trading within the uptrend channel (blue), as well as above the 3.14 neckline (red --), we might see it 3.34 resistance (pink --) next week.



For monday :

Support @ 3.14 (red --), 3.12 (mid blue), 3.037 (upp red, low blue), 2.86 (low red), 2.82 (blue --)
Resistance @ 3.22 (16, 18 apr high), 3.33 (upp blue), 3.34 (pink --)

Good Luck !!

STX Pan Ocean 100408

You can see from the chart that the current trading pattern of STX Pan Ocean is very similar to the pattern during the feb 14 period.

Although STX Pan Ocean is still trading within the uptrend channel (blue), the peaks have been getting lower each day.

We might see STX Pan Ocean consolidating around the 2.82 support (blue --) level. If that support fails to hold, we might see STX Pan Ocean testing the 2.70 level.



For tomorrow :

Support @ 2.885 (mid green), 2.82 (low pink, blue --), 2.75 (mid red, low green)
Resistance @ 2.94 (low blue), 3.03 (upp pink, upp green, 3.10 (upp red)

Good Luck !!

STX Pan Ocean 280308

It has been another roller-coaster ride for STX Pan Ocean since its fall on 10 mar. STX Pan Ocean broke the 2.82 psychological support (blue --) on 13 mar. And in a matter of 9 days, it broke up the 2.82 resistance.

STX Pan Ocean is now trading within the uptrend channel (green --). It tested the uptrend resistance (upp green --) today, before closing above the 2.82 psychological support (blue --).



For monday :

Support @ 2.82 (blue --), 2.76 (low green --), 2.647 (upp blue), 2.60 (mid red)
Resistance @ 2.978 (upp green), 3.07 (upp green --), 3.186 (upp red)

Good Luck !!

STX Pan Ocean 170308

As usual, STX Pan Ocean's dramatic rise during early feb, was met with an equally dramatic fall over the last few days.

I've done some housekeeping and redrawn the trendlines. STX Pan Ocean does not have many support left. If it breaks the long term uptrend support (low blue), we might see STX Pan Ocean testing the 2.09 low of 22 jan.

(Please note that the volume is wrongly indicated)

For tomorrow :

Support @ 2.356 (low green), 2.334 (low red), 2.25 (low blue)
Resistance @ 2.571 (upp green), 2.615 (upp blue), 2.677 (mid red)

Good Luck !!

STX Pan Ocean 140308

Just when we thought STX Pan Ocean's double-top formation was going to be negated, the next day saw it breaking the 2.82 psychological support (blue --), although it managed to close above it.

Then on 13 mar, STX Pan Ocean closed below the psychological and uptrend support (blue). It is now trading within the downtrend channel (pink).

(Please note that the volume is wrongly indicated)

For monday :

Support @ 2.517 (low pink), 2.44 (low green), 2.42 (low red)
Resistance @ 2.82 (blue --), 2.86 (low blue), 2.88 (upp pink), 3.00 (upp blue)

Good Luck !!

STX Pan Ocean 070308

STX Pan Ocean broke above the uptrend resistance (mid green) and downtrend support (red) on 6 mar. The next day, 7 mar, STX Pan Ocean traded below the downtrend support (red) but managed to close above the uptrend resistance. (mid green).

If STX Pan Ocean can maintain trading above the uptrend resistance (mid green), then the double-top formation would be negated.



For monday :

Support @ 3.134 (mid green), 3.115 (mid blue), 3.00 (low blue)
Resistance @ 3.215 (red), 3.346 (upp green)

Good Luck !!

STX Pan Ocean 060308

STX Pan Ocean broke out with volume today. It broke above the uptrend resistance (upp green) and the long term downtrend resistance (red).

Keep in mind that the trend prior to this break out was a double-top.



For tomorrow :

Support @ 3.23 (red), 3.13 (upp green), 3.08 (mid blue), 2.984 (upp pink), 2.965 (low blue)
Resistance @ 3.371 (upp blue)

Good Luck !!