Shares of Cosco and China Shipping businesses have taken a hammering on the stock markets this morning, having resumed trading after the merger of the two companies was confirmed on Friday.
In Hong Kong as of 10:30am, China Shipping Container Lines shares are trading at HK$2.26 down a whopping 27.33%. China Cosco Holdings shares are down HK$1.12 to be trading at HK$3.84, a drop of 23.5% while COSCO Pacific, the ports and terminals business of Cosco is down more than 15% to HK$8.51.
In Singapore, Cosco’s shipbuilding arm Cosco Corporation (Singapore) is down 16% to be trading at S$0.31.
The only positive trading from amongst the group so far is China Shipping Development, which is up 2.55%, in line with the positive nature of the tanker market. In a research note this morning, analysts Jeffries rated the stock a BUY and said: “It is a swap of a loss-making business for a profitable business.”
Jeffries also said that investors in Cosco Pacific should be “disappointed” while on China Shipping Container Lines it said: “Letting go of the container liner operation is a welcoming move but taking on container leasing, manufacturing and banking does not inspire.”
According to a release over the weekend, the merged entity will have four professional clusters: container shipping, ports and harbors, oil and gas shipping and shipping and financial services, while dry bulk will be held separately by Cosco Group.