Neptune Orient Lines Ltd., Southeast Asia's largest container line, fell the most in seven weeks in Singapore trading after UBS AG downgraded the company to "sell" on a global recession and slowing sea-cargo demand.
The shipping line dropped 9.2 percent to close at S$1.19, the most since Oct. 24. The stock had climbed 37 in the previous six trading days. Wan Hai Lines Ltd., also cut to "sell" at UBS, declined by its daily limit of 6.8 percent to NT$15.10 in Taipei.
Global container-shipping traffic has slowed as U.S. and European consumers pare spending on Asian-made goods because of housing-market slumps and rising economic concerns. Trade on Asia-Europe, transpacific and transatlantic routes will likely decline next year and many Asian container-shipping lines will only report "zero" earnings before interest, taxes, depreciation and amortization, according to UBS.
"The container-shipping operating environment in the second-half of 2008 has deteriorated more quickly than we expected,'' UBS analysts led by Alex Chang wrote in a report today. "Significant positive catalysts are lacking.''
Shipping lines are likely charging below breakeven rates on routes including Asia-Europe, long haul intra-Asia and transpacific, UBS said. These markets account for as much as 80 percent of Asian shipping lines' sales, it added.
The bank also expects excess fleet capacity to remain until 2011, a year longer than previously forecast, according to the note.
China Cosco Holdings Co., Asia's biggest shipping company by market value, fell 13 percent to HK$5.30 in Hong Kong. China Shipping Container Lines Co. dropped 8.2 percent to HK$1.12 in the city. China Shipping Development Co. slipped 17 percent to HK$7.31, also in Hong Kong.
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