General Market Review
In February the stock market performance was mixed as US stocks fell whereas European stocks outperformed. As growth concerns came up bond yields fell.
On the geopolitical side, the focus in recent weeks has been on tariffs, as global trade might be facing new trade paradigms. The talks between the President of Ukraine and the President of the USA to negotiate a peace agreement to end the war between Ukraine and Russia were also of great importance. The outcome was unclear at the end of February. Nevertheless, Ukrainian sovereign credit is already pricing in a 60% probability of a lasting ceasefire. In Germany, the centre-right Union party won the country’s federal election putting Friedrich Merz in line to become chancellor at a crucial time for Germany and Europe. With two years of recessions behind the direction of travel is still unclear, but it could be a landmark election.
In the US, the labour market was weaker as non-farm payrolls increased by only +143k in January from +156k in December. The unemployment rate was slightly better than consensus at 4.0% in January. In the Eurozone, the unemployment rate remained stable at 6.3%.
In the US, consumer price inflation for the month of January was in line with consensus and slightly higher than in the prior month. Headline inflation has increased by +3.0% (y-o-y) whereas core inflation (excluding energy and food) came in slightly above consensus at +3.3% (y-o-y).
In the Eurozone, consumer price inflation figures for the month of January came in higher versus the prior month. Headline inflation has increased by +2.5% whereas core-inflation by +2.7% respectively.
US 10-year treasury yields have decreased by -33 bp from 4.54% to 4.21%. On the other hand, German 10-year bund yields have decreased by -5 bp from 2.46% to 2.41%.
The MSCI World Index decreased by -0.7% (USD den.) and the MSCI Europe Index rose by +3.6% (EUR den.).
Energy and Transportation
In February 2025, brent crude oil prices continued its downward trend which began in Mid-January when prices were still above $ 80 per barrel. Growing concerns about a slowing world economy may weigh on global demand. At the same time, the possibility of easing sanctions against Russia may increase global oil supply. At the end of the month the price of Brent oil closed at $ 73.2 per barrel. Despite the drop in oil prices, Stoxx 600 Oil & Gas Index (Euro denom.) has increased by +1,5%, as index heavy-weight BP has shown a strong share price performance during the month of February. BP’s valuation discount versus its European peers had attracted interest from Elliott Investment Management, a hedge fund known for shaking up its targets. Interestingly, during its quarterly earnings call on the 11th of February, BP announced “a fundamental reset“ of the company’s strategy while reporting disappointing earnings. BP is likely to reduce spending on low-emission energy technologies and instead will boost oil and natural gas production.
The S&P Global Clean Energy Transition Index dropped by -2.2%. in February. Most transportation segments were negative, The DJ Transportation Average Index fell by -1.7%. whereas the US Global Jets Index dropped by -6,4%. The Russell 2000 Marine Transportation Segment fell by -7,4%. Most shipping sub-segments were down. Tanker stocks had reversed their previous month increase as an escalating trade war between the US and other nations may weigh on growth and thereby oil demand. Although the SCFI (Shanghai Containerized Freight Index) fell by another -26% in the month and thereby -23% year-on-year, container liner stocks were able to show gains. A longer lasting peace agreement between Israel and the Hamas now seems more difficult to reach and thereby a re-opening of the Red-Sea passage seems more distant. This may in turn to lead to longer sailing distances in the liner sector.
For more information, you can find our latest Factsheet – February 2025.
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 -4,2%. Long positions in the crude/product, dry-bulk and offshore supply segments contributed a negative -2.6%, -0.1%, and -1,5% respectively. By selling our long position in Scorpio Tanker in Mid-January our product tanker exposure has previously been reduced from 6.5% to 2.5% of NAV, thereby mitigating the losses in this segment. On the other hand, the short shipping book had a negative contribution of -1.0%. Short positions in the container and dry bulk segments had a contribution of -0.9% and -0,1% respectively. Long positions as well as short positions in other transportation stocks were able to contribute + 0.5% and + 1.3% respectively. In the area of freight services, the short book had a positive contribution of +0.2%. Long positions in the aviation segment had a negative contribution of -1.0%. At the end of January and during mid-February, the fund has realized profits in the airline segment and cut its long exposure of United Airlines, Delta Airlines and IAG by 40%. The overall airline exposure was thereby reduced from 20% to 15% of NAV. Within the energy segment long positions in the oil & gas and oil services segment had a negative contribution of -0.9% whereas short positions were neutral at +/-0,0%. The fund’s long position in the renewable segment had a positive contribution of +0.2%. Overall hedging positions via short index futures have contributed positively by ca. +0.2 % to the overall performance result.
Seahawk Investments GmbH
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