HK Stock Market Move | Some maritime stocks fell in early trading, and the ceasefire agreement in Gaza put pressure on shipping prices. Daiwa said that shipping companies are finding it difficult to immediately return to the Red Sea.

Some shipping stocks fell in the early trading session. As of the press time, SITC (01308) fell by 2.73% to 19.26 Hong Kong dollars; LC LOGISTICS (02490) fell by 1.88% to 20.85 Hong Kong dollars; OOIL (00316) fell by 1.01% to 107.6 Hong Kong dollars; COSCO Shipping Holdings (01919) fell by 0.67% to 11.82 Hong Kong dollars. On the news side, Qatar, Egypt, and the United States jointly announced on the evening of January 15th (local time) an agreement between Israel and the Palestinian Islamic resistance movement (Hamas) on a ceasefire in the Gaza Strip and the exchange of detainees. The agreement will take effect on January 19, 2025, and will be implemented in three phases. The main contract of the European Line Shipping Index fell by over 8% intraday due to the impact of the news. Daiwa released a research report stating that the positive progress in the Gaza war has had a negative impact on the stock prices of shipping companies because the market expects a decrease in freight rates. However, Daiwa believes that due to operational factors such as insurance costs, crew and cargo security issues, and canal fees, the cost for shipping companies to return to the Red Sea will be high. In addition, shippers are accepting changes in routes to ensure the safety of their cargo, leading to extended transportation times. Therefore, the bank expects that Red Sea shipping services will not return on a large scale this year, and future rerouting may become the new normal, meaning limited freight rate pressure.