Maersk sinks to bottom of STOXX on Citi double-downgrade

Zim Integrated Shipping Services

23/08/2022 08:29

** Shares of Maersk  MAERSKb.CO  and Hapag-Lloyd  HLAG.DE 
dive 3% and 4%, respectively, after Citi downgrades global
shipping groups citing the "end of rate upcycle"
    ** The broker double-downgrades Maersk to "sell" from "buy",
cuts Hapag-Lloyd to "sell" from "neutral", and ZIM Integrated
Shipping Services  ZIM.N  to "neutral" from "buy"
    ** The broker deems the sector "underweight" as economic
indicators imply a threat to demand
    ** Freight rates are peaking in Q3, mainly driven by
annualisation of contract rates, while demand indicators point
to a deeper slowdown, Citi says
    ** It points to U.S. home sales and inflation as leading
indicators for container demand, with recent data pointing to a
big downside in consumption  urn:newsml:reuters.com:*:nL1N2Z71AO  urn:newsml:reuters.com:*:nL1N2ZL0KI
    ** Citi also sees a risk to stability with alliance
structure breakdown in 2023 as the 2M alliance, controlling 80%
of the market, is threatened by EU regulation
    ** It slashes Maersk's target price by 91% to DKK 14,750,
Hapag-Lloyd's by 98% to EUR 212, and ZIM's by 133% to $51.50
    ** Analysts have previously pointed to declining freight
rates as a threat to earnings  urn:newsml:reuters.com:*:nL8N2ZO46V
    ** Maersk is the worst performer on Europe's Stoxx 600 index
 .STOXX 

 (Reporting by Jacob Rasmussen)
 ((jacob.rasmussen@thomsonreuters.com))