The most exciting stock deals in Asia this year are not limited to chip companies, as shipping companies are also making significant progress as geopolitical tensions cause a jump in container ship and tanker rates, boosting the sector's profit outlook.
Goldman Sachs' index of Asian shipping stocks rose by about 17% during the current quarter, while its counterpart for the semiconductor sector fell by 18% during the same period.
Meanwhile, the surge in shipping stocks is providing investors with an alternative to the crowded artificial intelligence sector in Asia, after the war in the Middle East led to a shortage of ships, with analysts expecting further gains for the sector in the coming period.
Shipping sector: Strong demand and profits exceeding expectations
Joachim Hanisdahl, CEO of Gersemi Asset Management, said that demand is very good this year and that earnings have come in much better than expected. The market is currently experiencing a strong seasonal period during the year.
These gains are being made while ships face disruptions in the Red Sea and the Strait of Hormuz due to the conflict with Iran, while the rush to preempt US tariffs has also increased demand and pushed shipping rates higher.
The Shanghai Container Shipping Index hit its highest level since July 2024, marking its eighth consecutive week of gains.
Top winners in Asian stocks
Stocks leading gains in Asia include TS Lines, SITC International Holdings, and Mitsui OSK Lines.
Typhoons in Asia, coupled with turmoil in the Middle East, are also expected to increase port congestion, reduce actual capacity, and keep prices high, according to Bloomberg Intelligence.
Bloomberg Intelligence said these effects could be exacerbated by shipping companies rushing to move goods ahead of China's Golden Week holiday from October 1 to 7.
Jefferies raised its profit forecasts and price targets for Japanese shipping companies Nippon Yusen (NIPON Yusen KK), Kawasaki Kisen Kaisha (KAK), and Mitsui. It said container shipping markets remain stronger than expected due to Red Sea disruptions, congestion, and resilient demand.
Iran war lull threatens shipping forecasts
Certainly, the greatest threat to these prospects lies in a diplomatic breakthrough with Iran. US President Donald Trump has said his officials held very good talks with Iranian envoys in New York.
Reaching an agreement to restore shipping traffic through the vital waterway could alleviate vessel shortages and reduce war risk insurance costs. Currently, ongoing disruptions and high freight rates are maintaining a favorable profit environment for Asian shipping companies.
Simon Sidemalm, portfolio manager at Tundra Fonder AB, said: “There appears to be a correlation between container prices and the recent rise in shipping stocks. Geopolitical tensions around key straits are lengthening shipping routes, coinciding with higher fuel prices.”
