US Shipping Stocks Surge on Cosco Blacklist News
Investing.com -- Shares of U.S.-based shipping companies rose in the last trading session following news that the U.S. government blacklisted China's Cosco Shipping Holdings Co. and two shipbuilding companies over alleged ties to the People's Liberation Army. This action is expected to increase scrutiny of the maritime transportation and shipbuilding sectors, leading to a notable rise in the stock prices of many American shipping firms.
DHT Holdings (NYSE: DHT) led the increase with a 7.3% gain, followed by Scorpio Tankers (NYSE: STNG) up 7%, Teekay Tankers Ltd (NYSE: TNK) up 6.2%, International Seaways (NYSE: INSW) up 6.4%, and Nordic American Tanker (NYSE: NAT) up 4.5%. The blacklist, published in the Federal Register, designates these entities as Chinese military companies; this labeling discourages U.S. firms from doing business with them but does not impose specific penalties.
The blacklist is part of Washington's strategy to address concerns about China's growing influence in the maritime sector. China's shipbuilding industry is developing, and the country's shipping lines and ports are becoming increasingly geopolitically significant. This has raised concerns in the U.S., where the shipbuilding industry has significantly declined over the years.
Despite the absence of specific penalties related to the blacklist, the market reacted positively to the increased scrutiny of Chinese companies. Kenneth Loh, an analyst from Bloomberg Intelligence, commented on the situation: "While it may deter U.S. firms from directly doing business with Cosco, the blacklist—which doesn't include specific penalties—doesn't prevent the carrier from shipping goods to the U.S. through contracts signed between local importers and Chinese exporters, so the impact is likely to be limited."
This perspective reflects the market view that, while the blacklist may disrupt some business agreements, it is not expected to have a significant effect on trade flows between the U.S. and China. The rise in U.S. shipping stocks demonstrates investors' optimism about the potential for American companies to fill gaps arising from the blacklist.
This move comes at a time when the U.S. government continues to scrutinize Chinese companies with military connections, having previously targeted both Cosco and another firm listed on the blacklist, Cnooc Ltd., with sanctions. The immediate impact of the blacklist on the stock prices of these companies was evident, as Cosco's shares fell by as much as 4.4% in Hong Kong following the announcement.