US shipping stocks rise on Cosco blacklist news

Investing.com -- Shares of US-based shipping companies surged in the latest trading session, buoyed by the news that the US government has blacklisted China's Cosco Shipping Holdings Co. and two shipbuilders over alleged ties with the People's Liberation Army. The move is expected to increase scrutiny of marine transport and shipbuilding sectors and has led to a notable uptick in the stocks of several American shipping firms.

DHT Holdings (NYSE: NYSE:DHT ) led the gains, rising 7.3%, followed by Scorpio Tankers (NYSE: NYSE:STNG ) at 7%, Teekay Tankers Ltd (NYSE: NYSE:TNK ) up 6.2%, International Seaways (NYSE: NYSE:INSW ) climbing 6.4%, and Nordic American Tanker (NYSE: NYSE:NAT ) with a 4.5% increase. The blacklist, which was published in a Federal Register filing, designates the entities as Chinese military companies, a label that discourages US firms from dealing with them, although it does not impose specific penalties.

The blacklist is part of a broader strategy by Washington to address concerns over China's growing influence in the maritime sector. The Chinese shipbuilding industry has been flourishing, and the country's shipping lines and ports are becoming increasingly significant in geopolitical terms. This has raised alarm in the US, where the shipbuilding industry has significantly declined over the years.

Despite the lack of specific penalties associated with the blacklist, the market has reacted positively to the increased scrutiny on Chinese companies. Analyst Kenneth Lohwrites from Bloomberg Intelligence commented on the situation, stating, “While it might discourage US firms from dealing directly with Cosco, the fallout is likely to be limited as the blacklist — which carries no specific penalties — doesn’t prevent the liner from shipping goods to the US on contracts inked between local importers and Chinese exporters.”

This sentiment reflects the market's view that while the blacklist could disrupt some business dealings, it is not expected to have a severe impact on trade flows between the US and China. The rise in US shipping stocks indicates investors' optimism about the potential for American companies to fill any gaps that may arise due to the blacklist.

The move comes as the US government continues to scrutinize Chinese companies with military links and has previously targeted both Cosco and Cnooc (HK:0883 ) Ltd., another firm mentioned in the blacklist, with sanctions. The blacklist's impact on these companies' stock prices was immediate, with Cosco shares falling as much as 4.4% in Hong Kong following the announcement.

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Source: Investing.com