COSCO SHIP ENGY's stock experienced a significant intraday decline of 5.05% on Wednesday, extending recent weakness in the shipping sector.

The decline followed the company's announcement that its Future Ocean unit agreed to a 20-year lease for two gas carriers from Seaspan Corp., involving a fixed rental commitment of 3.40 billion yuan. Concurrently, the company disclosed it would guarantee the borrowings of several subsidiaries, raising investor concerns about increased financial obligations.

Broader market conditions contributed to the selloff, with the oil shipping sector facing an oversupply situation. The ongoing Hormuz Strait blockade has kept passage volumes at low levels, coinciding with the industry's seasonal low period, resulting in loose vessel availability and downward pressure on freight rates. Additional pressure came from the company's capital expenditure plans, including a RMB 1.018 billion capital injection to a subsidiary for tanker construction and approximately RMB 800 million in newbuilding lease contracts, which raised questions about cash flow allocation in a weak rate environment.