The share price of COSCO SHIP ENGY (HKEX: 01138)

has extended its decline, dropping over 6% in recent trading. At the time of writing, the stock was down 5.04% to HKD 14.33, with a turnover of HKD 145 million.

Geopolitical Tensions and Market Impact

Recent events have contributed to market volatility. The Islamic Revolutionary Guard Corps of Iran stated that on the evening of the 2nd, a US military projectile struck an Iranian oil tanker near the Strait of Hormuz, damaging its engine room. In response, the IRGC targeted the vessel 'Panaya', which it said belonged to US and Israeli interests.

Analyst Perspectives on the Downturn

Analysts point to a significant easing of the geopolitical risk premium as a key factor. A research note from CITIC Securities highlighted that freight rates on key routes, such as from the US Gulf and West Africa to China, have fallen approximately 42% and 68% from their recent peaks, respectively. The dissipation of this premium, coupled with a westward shift of vessels, has led to an oversupply situation that is weighing on the market.

Further analysis from Guotai Junan Securities indicates a contraction in global seaborne crude oil exports. For the March-April period, exports were down over 10% year-on-year, with a peak contraction exceeding 20% in mid-March and a roughly 12% decline in April. This reduced demand for tanker capacity is adding to the downward pressure on shipping rates and related equities.