Market Insight | Shipping stocks rebound in early trading, Israeli-Palestinian ceasefire agreement reached but conflicts persist, DHL and A.P. Møller - Mærsk successively announce July freight rate increases

Shipping stocks rebounded in the morning session. As of the time of publication, COSCO Shipping Holdings rose by 5% to HKD 13.86; Sinotrans Shipping increased by 4.62% to HKD 21.5; Orient Overseas International rose by 4.35% to HKD 129.5; and COSCO Shipping Development went up by 2.75% to HKD 1.12. On the news front, on June 10th, the United Nations passed a ceasefire proposal for Israel and Palestine. However, this proposal is a product of active mediation by the United States to achieve its own strategic goals, with both sides of Israel and Palestine showing a negative attitude. Huafu Securities pointed out that there are irreconcilable conflicts between the two parties, making it difficult to ease the situation in the short term. The tight capacity caused by detours, port congestion, and early entry into the peak season are the main drivers supporting shipping companies' rate hikes. The firm noted that recently, Dafeng and Maersk have successively raised July freight rates. In the short term, the current high freight rates are expected to continue at least until the peak season in Q3, with rates possibly peaking in July. The strength of airlines to maintain rates will depend on the situation of freight rates falling after the rush in July and the intensity of restocking in Europe and the United States in the second half of the year after possible interest rate cuts. Supply and demand reversal will support the full-year performance recovery of shipping companies, making them winners in the global supply chain congestion in 2021. If the conflict in the Red Sea continues for a long time, it will benefit shipping giants in raising long-term contract prices by 2025 and significantly restoring valuations