General Market Review 

The outcome of the US election has been at the center of every discussion in November. The new administration was expected to set the following policy themes on the agenda: fiscal and tax policy, immigration controls, and tariffs. A key question continued to be how strong inflationary pressure could be in the coming months after the so-called ‘republican sweep’ was fully implemented. Shortly after digesting the outcome of the US-presidential election, the FED decided to cut rates by 25 Bp bringing down the effective rate to 4.58%. Powell emphasized that the strategy is to move to a more neutral setting over time. Although this rate cut was mostly expected by market participants, there was a tremendous repricing in the market: 12-month Federal Funds Future rose from around 3.6% pre-election to a provisional high of around 3.9% post-election and closed at 3.8% at the end of November as president-elect Trump could increase inflationary pressure again.

During the month of November almost all US-equity segments generated high single digit returns, whereas European stocks closed in slightly negative territory. However, Asian stocks were among the biggest losers. Particularly, Chinese stocks declined after news that the US proposed more limits on China on the sale of semiconductor equipment and AI memory chips.   

The US labour market was weaker in October as non-farm payrolls increased only by +12k from +254k in September. The unemployment rate was stable at 4.1% in October. In the Eurozone, the unemployment rate remained stable at 6.3% in October.

In the US, consumer price inflation for the month of October was in line with consensus and slightly higher than in the prior month. Headline inflation has increased to 2.6% (y-o-y) whereas core inflation (excluding energy and food) remained stable at 3.3% (y-o-y).

In the Eurozone, consumer price inflation figures for the month of October came in as expected and higher versus the prior month. Headline inflation has increased to 2.0% whereas core-inflation was at +2.7%.

US 10-year treasury and German 10-year bund yields have decreased by 10 bps from 4.3% to 4.2% and by 30 bps from 2.4% to 2.1% respectively.

The MSCI World Index rose by +4.6% (USD den.) and the MSCI Europe Index by +1.1% (EUR den.).

Energy and Transportation

President-elect Donald Trump made energy policy a pillar of his campaign, vowing to slash and unshackle US oil producers to drive up production and bring down prices for consumers. On taking office next January, the industry expects Trump to eliminate many environmental rules Biden imposed. The new administration is expected to give the oil industry increased access to public lands and dilute protections for endangered species. Despite the anticipated regulatory overhaul a rapid increase in output during the second Trump Term seems unlikely as production under Biden’s term has already hit record levels. US oil production has increased by +2mn. barrels per day to 13.5 mn. barrels/day since 2021. The capital discipline of oil majors is unlikely to change. On the 29th of November, the OPEC + consortium has decided to postpone an important meeting on the potential future of its production curbs. At the rescheduled meeting, OPEC + members were expected to agree on an extension of both the current cuts of production quotas and the additional voluntary cuts for at least several months. The price of Brent oil was unchanged throughout the month. At the end of November, the price of Brent closed at $ 72.9 per barrel. In this environment, the Stoxx 600 Oil & Gas Index (Euro denom.) has increased by +2,6%.

The renewable energy sector will not be given preference by the incoming US administration. The Inflation Reduction Act, which so far has been the strongest action to boost renewable energy, will most likely be repealed.  The US renewable energy sector has put “half a dozen” of projects on hold. Given the uncertainty, the S&P Global Clean Energy Sector Index dropped by -5.4% in November. With that, the renewable energy segment is still down by -19.9% year-to-date.

Transportation segments were mixed during the month. The DJ Transportation Average Index increased by +8.6%. Air travel has been strong. According to the International Air Transportation Association (IATA) global travel is expected to rebound to 90% of the pre-pandemic level during this holiday season, signaling a robust recovery in the travel industry. The US Global Jets Index has increased by +7,8%.

On the other hand, a potential escalation of trade policies by the US has affected the market sentiment of shipping sector stocks. A potential introduction of tariffs on imports from Canada and Mexico as well as 10% tariffs on Chinese goods have the potential to affect tonne-mile demand in some shipping segments. During the previous trade war (first Trump Administration) the introduction of tariffs had a negative impact on world-wide GDP of ca. -0.3%, whereas only 2% of seaborne trade was tariffed. At the time the trade war had a negative impact of -0.4% on container trade TEU miles in 2019. The demand impact on dry bulk was at -0.7% at the time whereas within energy shipments due to changing trade patterns no material impact has been experienced. All the impact on the shipping industry during the First Trade War were quite moderate. Despite this, shipping stocks have dropped sharply with the Russell 2000 Marine Transportation Index closing the month by -7.0%.

In the dry-bulk segment, Capesize-Rates has increased slightly from $15k/day to $ 18k/day. Despite the ongoing disruptions in the Red Sea container freight rates dropped by 3% in the month of November. The SCFI (Shanghai Containerized Freight Index) is still up by +120% year-on-year. Crude oil tanker (VLCC – Very Large Crude Carrier) rates have further softened from $ 26k/day to $ 20k/day at month end, whereas product tanker rates (MR earnings) closed the month slightly higher at $20k/day. VLGC (Very Large Gas Carrier) rates have increased slightly from $ 40k/day to $ 43k/day at the month-end.                                                                                                      

Fund Performance

The fund performance of both the USD as well as EUR-denominated share classes was negative.

Within transportation, the shipping long book had an overall negative contribution of -4,2%. Long positions in the crude/product, dry-bulk, and offshore supply segments contributed a negative -2.3, -0.7%, and -1,2% respectively. Given the sell-off in shipping stocks, the tanker and dry-bulk segments are now priced with an average discount to their NAVs of 20% and 30% respectively. Despite the highly attractive supply-demand fundamentals of the Offshore Support Vessel Sector, temporary weakness in the North Sea has led to a correction in PSV spot rates of $ 10k/day (avg.) locally, whereas rates have been firm in other parts of the world.  On the other hand, the short shipping book had a negative contribution of -0.7%. Short positions in the container and LPG segments had a contribution of -1.0% and +0,3% respectively.

In the area of freight services, the short book has a negative contribution of -0.4%. On the other hand, long positions in the aviation segment had a positive contribution of +1.2%.

Within the energy segment, the long positions in the oil & gas and oil services segment had a positive contribution of +1.8% whereas short positions contributed negatively by -0,6%. The fund’s short position in other energy segments had a positive contribution of +0.1%.

Overall hedging positions via short index futures have contributed negatively by ca. -0.6 % to the overall performance result. Given the strength of the US-dollar investments in non-USD-denominated instruments have contributed negatively by ca. – 0.6%.

For more information, you can find our latest  Factsheet – November 2024.

Seahawk Investments GmbH

This document is a customer information (“CI”) within the meaning of the German Securities Trading Act (WpHG), the “CI” is directed exclusively to professional clients within the meaning of section 67 WpHG (natural and juristic persons) with habitual residence or registered office in Germany and is used solely for informational purposes. This “CI” cannot replace an individual investment- and investor-friendly advice and does not justify a contract or any other obligation. Furthermore, the contents do not constitute investment advice, an individual investment recommendation, an invitation to subscribe for securities or a declaration of intent or a request to conclude a contract for a transaction in financial instruments. Also, it was not written with the intention of providing legal or tax advice. The tax treatment of transactions depends on the personal circumstances of the respective customer and may be subject to future changes. The individual circumstances of the recipient (including the economic and financial situation) were not taken into account in the preparation of the “CI”. Past performance is not a reliable indicator of future performance. Recommendations and forecasts are non-binding value judgments about future events and may therefore prove to be inaccurate with respect to the future development of a product. The listed information refers exclusively to the time of the creation of this “CI”, a guarantee for timeliness and continued correctness cannot be accepted. An investment in mentioned financial instruments / investment strategy / securities services involves certain product specific risks – e.g. Market or industry risks and risk in currency, default, liquidity, interest rate and credit – and is not suitable for all investors. Therefore, potential prospects should make an investment decision only after a detailed investment advisory session by a registered investment advisor and after consulting all available sources of information. For further information, please refer to the basic information sheet (PRIIPs) and the securities prospectus for free: https://seahawk-investments.com/fonds/. The securities prospectus is provided to you in English and the basic information sheet in German. The above content reflects only the opinions of the author, a change of opinion is possible at any time, without it being published. The present “CI” is protected by copyright, any duplication and commercial use are not permitted. Editor: Seahawk Investments GmbH, Bettinastraße 62, 60325 Frankfurt am Main acts as a tied agent (section 3 (2) German Wertpapierinstitutsgesetz (WpIG)) on behalf of, in the name of, for account and under the liability of the responsible legal entity BN & Partners Capital AG, Steinstrasse 33, 50374 Erftstadt. BN & Partners Capital AG has a corresponding license (section 15 WpIG) from the German Federal Financial Supervisory Authority (BaFin) for the provision of investment advice in accordance with section 2 (2) no. 4 WpIG and investment brokerage according to section 2 (2) no. 3 WpIG.

Foreign Exchange Fluctuations may have a negative impact on performance results.

Please note that the information from Lipper Leaders relates to the previous month. All rights reserved. Lipper Leaders – © 2024 Lipper Lipper Leaders Ranking Criteria – Ratings from 1 (low) to 5 (high) First Number = Total Return; Second Number = Consistent Return; Third Number = Preservation; Fourth Number = Expense

General Market Review 

Most international equity markets fell during the month of October. Sluggish growth particularly outside the United States remained the primary concern for investors. Uncertainty ahead of the US presidential elections was heightened.

The resilience of the US economy and higher than expected inflation rates have led to a reassessment of anticipated Federal Reserve (Fed) rate cuts. Interest rate cuts were still expected in November and potentially December, but a strong labour market and resilient inflation have reduced the likelihood of a 50 bp cut at either of these meetings.

In China, policymakers introduced new initiatives that will allow local governments to use special local government bonds to purchase land from troubled developers alongside a planned debt ceiling hike for local governments. This indicated Beijing’s commitment to managing the real estate bubble and boosting consumption. Beijing is yet to announce the size of a new fiscal package.

 The US labour market was slightly stronger in September as non-farm payrolls increased by +254k in September from +142k in August. The unemployment rate fell further from 4.2% in August to 4.1% in September. In the Eurozone, the unemployment rate fell from 6.4% to 6.3% in September.

In the US, consumer price inflation for the month of September came in higher than expected. Headline inflation has decreased to 2.4% (y-o-y) whereas core inflation (excluding energy and food) has increased from 3.2% (y-o-y) to 3.3% (y-o-y)

In the Eurozone, consumer price inflation figures for the month of October came in higher than expected. Headline inflation has increased from 1.7% in the prior month to 2.0% whereas core inflation was unchanged at +2.8%.

US 10-year treasury yield and German 10-year bund yields have increased by 50 bps from 3.8% to 4.3% and by 30 bps from 2.1% to 2.4% respectively.

The MSCI World Index fell by -2.0% (USD den.) and the MSCI Europe Index decreased by -3.3% (EUR den.).

Energy and Transportation

Fears that the conflict between Israel and Iran would disrupt supplies led to a sharp increase of the price of Brent oil to above $ 80 per barrel at the beginning of the month. As it became clearer that Isreal would not attack Iran’s oil infrastructure investors’ attention was re-directed to the market fundamentals. Both Opec, the oil cartel, and the International Energy Agency trimmed their forecasts for oil demand next year, after continuing weakness in the Chinese market. According to the IEA oil demand in China would increase by just +150k barrels a day in 2024, after consumption dropped for the fourth consecutive month in August, by 500k b/d. It trimmed its overall forecast for oil demand growth this year by 40k b/d to 860k b/d. At the end of the month the price of Brent oil closed at $73.2 slightly higher than at the end of September. The Stoxx 600 Oil & Gas Index (Euro denom.) was unchanged. Renewable energy investors became more and more concerned as the Republican part caught up in the US election polls, as a new Republican president could put the Inflation Reduction Act in jeopardy. The S&P Global Clean Energy Sector Index dropped by -11.0% in October. With that the renewable energy segment is still down by -15.3% year-to-date.

Transportation segments were mixed during the month. The DJ Transportation Average Index decreased by – 0.25%. The aviation segment continued to be strong. As airline capacity was moderate airfares have turned higher. Major airlines such as American Airlines was able to lift its full year profit forecast. The US Global Jets Index has increased by + 9,7%.

Continuing weakness in in the Chinese economy and lack of details concerning a fiscal stimulus package which may have an immediate effect on the real economy has weighed on the shipping sector. The Russell 2000 Marine Transportation Index has dropped by -9.7%. In the dry-bulk segment Capesize-Rates have softened from $30k/day to $15k/day. Despite the ongoing disruptions in the Red Sea container freight rates were unchanged in the month of September. The SCFI (Shanghai Containerized Freight Index) is still up by +30% year-on-year. Crude oil tanker (VLCC – Very Large Crude Carrier) rates have softened slightly from $27k/day to $ 26k/day at month end, whereas product tanker rates (MR earnings) were range-bound at $19k/day. VLGC (Very Large Gas Carrier) rates have decreased further from$ 43k/day to $40k/day at the month-end.

Fund Performance

The fund performance of both the USD as well as EUR denominated share classes were negative.

Within transportation the shipping long book had an overall negative contribution of —5,3%. Long positions in the crude/product, dry-bulk and offshore supply segments contributed a negative -2.0, -2.4%, and -0,9% respectively. Given the sell-off in shipping stocks the tanker and dry-bulk segments are now priced with an average discount to their NAVs of 10% and 30% respectively. Selected offshore supply vessel operators are trading at less than 50% of their NAV. Given the attractive supply-demand dynamics this niche shipping segment appears attractive. New vessel order books are at a record low of just 2.7% relative to the world-wide OSV-fleet.  On the other hand, the short shipping book had a positive contribution of +0.5%. Short positions in the container and LPG segments had a contribution of +0.25% and +0,25% respectively.

In the area of freight services, the short book was performance neutral. On the other hand, long positions in the aviation segment had a positive contribution of +0.7%.

Within the energy segment the long positions in the oil & gas and oil services segment had a negative contribution of -0.5% and the short book has added +0,1%. The fund’s short position in other energy segments had a positive contribution of +0.1%.

Overall hedging positions via short index futures have contributed negatively by ca. -0.1 % to the overall performance result.

For more information, you can find our latest  Factsheet – October 2024.

Seahawk Investments GmbH

This document is a customer information (“CI”) within the meaning of the German Securities Trading Act (WpHG), the “CI” is directed exclusively to professional clients within the meaning of section 67 WpHG (natural and juristic persons) with habitual residence or registered office in Germany and is used solely for informational purposes. This “CI” cannot replace an individual investment- and investor-friendly advice and does not justify a contract or any other obligation. Furthermore, the contents do not constitute investment advice, an individual investment recommendation, an invitation to subscribe for securities or a declaration of intent or a request to conclude a contract for a transaction in financial instruments. Also, it was not written with the intention of providing legal or tax advice. The tax treatment of transactions depends on the personal circumstances of the respective customer and may be subject to future changes. The individual circumstances of the recipient (including the economic and financial situation) were not taken into account in the preparation of the “CI”. Past performance is not a reliable indicator of future performance. Recommendations and forecasts are non-binding value judgments about future events and may therefore prove to be inaccurate with respect to the future development of a product. The listed information refers exclusively to the time of the creation of this “CI”, a guarantee for timeliness and continued correctness cannot be accepted. An investment in mentioned financial instruments / investment strategy / securities services involves certain product specific risks – e.g. Market or industry risks and risk in currency, default, liquidity, interest rate and credit – and is not suitable for all investors. Therefore, potential prospects should make an investment decision only after a detailed investment advisory session by a registered investment advisor and after consulting all available sources of information. For further information, please refer to the basic information sheet (PRIIPs) and the securities prospectus for free: https://seahawk-investments.com/fonds/. The securities prospectus is provided to you in English and the basic information sheet in German. The above content reflects only the opinions of the author, a change of opinion is possible at any time, without it being published. The present “CI” is protected by copyright, any duplication and commercial use are not permitted. Editor: Seahawk Investments GmbH, Bettinastraße 62, 60325 Frankfurt am Main acts as a tied agent (section 3 (2) German Wertpapierinstitutsgesetz (WpIG)) on behalf of, in the name of, for account and under the liability of the responsible legal entity BN & Partners Capital AG, Steinstrasse 33, 50374 Erftstadt. BN & Partners Capital AG has a corresponding license (section 15 WpIG) from the German Federal Financial Supervisory Authority (BaFin) for the provision of investment advice in accordance with section 2 (2) no. 4 WpIG and investment brokerage according to section 2 (2) no. 3 WpIG.

Foreign Exchange Fluctuations may have a negative impact on performance results.

Please note that the information from Lipper Leaders relates to the previous month. All rights reserved. Lipper Leaders – © 2024 Lipper Lipper Leaders Ranking Criteria – Ratings from 1 (low) to 5 (high) First Number = Total Return; Second Number = Consistent Return; Third Number = Preservation; Fourth Number = Expense