Weekly Market Update – Week 1 – 3rd January – 09th January 2022 By Thomas Chasapis, Research Analyst of Allied Shipbrokers

The dry bulk sector, undoubtedly, began the New Year with a strong start. We are at 12-year high levels in average returns for all dry segments, with Panamax, Supramax and Handysize finishing the year well above their respective levels of 2009. At the same time, asset price levels reached 10-year highs, as a result of the rally in SnP activity. However, have we reached the end of the story for what we saw in 2021? The below graph indicates another success story for the dry bulk sector during the previous year – the tremendous bull-run within a lower risk regime. We have repeatedly argued that during a “boom” period, volatility is of lower concern during an uptrend. However, the risk of a steep downside trend still holds. Having used the default settings (20-day simple moving average figures, +/- 2 standard deviations) to create lower and upper Bollinger Band Percentage signals, pullbacks periods during 2021 were mostly kept above the lower band territory (RHI – 0). In other words, they were kept shallow, underlying once again the strong trend in freight returns. This technical indicator captures the stringer availability of oversold conditions in the market well, clearly showing the presence of opportunities noted in the market in 2021. Notwithstanding this, this was not the case for the theoretical overbought readings. Given the vulnerability in hefty exaggerations within shipping markets, many failed to distinguish the bigger uptrend. Despite the many rough similarities with 2009 year, 2021 outperformed both in terms of absolute returns, as well as risk-adjusted returns. The objective of the above though is not to take any of the recent trends for granted, neither to make absolute comparisons with historical performance. It is more important to have a view of similarities and differences before we rush to base any forward view on what past data and market orbits show. It could be that the freight market will enter a less risky environment in the near term, sustaining at the same time a new floor level, or it could be that we could see the exact opposite, with extreme ups and down that will skew the overall average results. In either scenario, will asset prices similarly to the trend noted after 2009? At that time, they continued to grow for a couple of years or so, despite the general uninspiring trend seen in realized earnings. I believe this will likely be one of the main questions that will challenge the market during the year ahead.

ELNAVI Newsletter
More information: ELNAVI,
19, Aristidou str., Piraeus 185 31,
Tel.: +30 210 45.22.100, e-mail: elnavimagazine@gmail.com

Comments are closed

© 2022 Elnavi. All Rights Reserved. Log in

- Designed by Gabfire Themes