Attractiveness of container shipping as an investment asset class - perspective from an equity investor with investment horizon of 5 years

• Main Author: Tan, Ryan Kye Han
• Other Authors: -
• Format: Final Year Project
• Language: English
• Published: Nanyang Technological University 2022
• Subjects: Engineering::Maritime studies; Business::Finance::Investments
• Online Access: https://hdl.handle.net/10356/163713
• Institution: Nanyang Technological University

The container shipping industry saw unprecedented growth during the Covid-19 pandemic which saw soaring freight rates and profits. As more container shipping companies are starting to utilize the capital market, this research paper will therefore aim to assess the attractiveness of container shipping as an investment asset class from the perspective of an equity investor. This is the first of three volumes focusing on assessing the attractiveness of stock investment in public container shipping companies through a quantitative analysis of historical data. All data used in the course of research was retrieved from reputable and databases and reports by Bloomberg Intelligence, Clarksons Research, TradeWinds, and the U.S. Energy Information Administration. Comparison of historical returns to market average was used to determine the relative performance of container shipping stocks to market average across a span of 12 years from 2010 to 2021. Correlation analysis was then conducted to identify potential indicators of future share price performance that could be used to guide investor decisions. Overall, the results show that stock investment in container shipping generates returns that fall below market average with the exception of 2021 which saw extremely high returns corresponding to the Covid-19 pandemic. It was also found that container freight indexes were key indicators of overall share price performance. However, since this volume is an analysis of past performance, it is not sufficient to predict how container shipping will perform within the investment horizon of the next five years, thus necessitating further investigation in subsequent volumes.