The share price of China COSCO (1919), the world's largest dry-bulk shipping operator, slumped to its lowest level in 15 months as the commodity-shipping rates benchmark tumbled to a near 19-month low.
The stock dropped as much as 9.1 percent before closing at HK$9.60 while Pacific Basin (2343) slid 6.36 percent and CSCL (2866) fell 1.87 percent.
About 90 percent of China COSCO's operating income comes from its dry- bulk shipping business. "Dry-bulk shipping stocks are correlated with the movement of the Baltic Dry Index. The market started selling on worries of a further BDI slide," said Johnson Leung, analyst at JPMorgan Securities.
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The BDI, an index covering dry bulk shipping rates, dropped to its lowest on Wednesday to 5,026 from its peak of 11,793 in May. This was the result as steelmakers in China - the largest customer for dry-bulk ships - tried to cut production and reduce demand for iron- ore shipments. "We think the 20 percent plus drop over the past five days was not based purely on fundamentals," Leung said in a report. "The market is still generally skeptical on a big turn at this point as China has shown signs of slowing."
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