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<Research>HSBC Research Keeps Reduce on AIR CHINA, CHINA SOUTH AIR; Strait of Hormuz Closure Spikes Tanker Freight Rates
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Iran's closure of the Strait of Hormuz has greatly impacted maritime oil and natural gas trade, HSBC Global Research wrote in its research report. As tanker fleet capacity tightens and long-haul transport volume increases, there is further room for freight rates on routes from the Americas and West Africa (1.3 to 2.4 times the distance of the Middle East Gulf to China route) to rise. As for the container shipping sector, the worsened port congestion as a result of disruptions at Middle Eastern ports (accounting for 5% of global container throughput) could benefit the sector unexpectedly by way of boosting new ship orders. HSBC Global Research has kept a Reduce rating on COSCO SHIP HOLD (01919.HK) and OOIL (00316.HK). Regarding the airline sector, HSBC Global Research believes escalating oil prices will erode profits, with Asian airlines being more sensitive to oil price increases, especially without hedging. A 10% increase in oil prices is expected to reduce the profits of Chinese airlines by about 68% and CATHAY PAC AIR (00293.HK) by 29%. The broker has also maintained a Reduce rating on AIR CHINA (00753.HK) and CHINA SOUTH AIR (01055.HK). AAStocks Financial News |
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