General Market Review
In March global stock markets posted a broad decline. Particularly, technology stocks sold off strongly with the Nasdaq Composite Index tumbling -8.1% amid rising economic concerns and escalating geopolitical tensions. Geopolitically the focus was still on tariffs, as the president of the USA imposed a 25% tariff on imports of automobiles and certain automobile parts that would come into effect on April 2. He also hinted at a massive imposition of aggressive trade tariffs to be unveiled as part of the “Liberation Day” policy. The ongoing conflict between Russia and Ukraine intensified with unprecedented drone attacks on Moscow, marking the most significant assault on Russian territory since the conflict began in February 2022. During its meeting on March 5-6, the ECB expressed significant concerns about the potential economic impact of US-American tariffs. Policymakers warned that such tariffs, along with possible retaliatory measures, could hamper economic growth and lead to inflationary uncertainties. In response, the ECB decided to cut its key interest rate further by 25 Bp from 2.75% to 2.5%. In the US, the labour market was mixed as non-farm payrolls increased by +151k in February from +143k in January but the unemployment rate was slightly higher at 4.1% in February. In the Eurozone, the unemployment rate decreased by 10 Bp to 6.2%.In the US, consumer price inflation for the month of February was below consensus and slightly lower than in the prior month. Headline inflation has increased by +2.8% (y-o-y) whereas core inflation (excluding energy and food) came in at +3.1% (y-o-y).
In the Eurozone, consumer price inflation figures for the month of February came in lower versus the prior month. Headline inflation has increased by +2.3% whereas core-inflation by +2.6% respectively. US 10-year treasury yields were unchanged at 4.21%. On the other hand, German 10-year bund yields have increased by +33 bp from 2.41% to 2.74%. The MSCI World Index decreased by -4.5% (USD den.) and the MSCI Europe Index by -4.0% (EUR den.).
Energy and Transportation
In March 2025, brent crude oil prices were rangebound. Despite investor concerns about a potential trade war oil prices stabilised towards the end of the month as the US issued new Iran sanctions. At the end of the month the price of Brent oil closed at $ 73.6 per barrel and thereby nearly unchanged versus the previous month. Against the general stock market trend, the Stoxx 600 Oil & Gas Index (Euro denom.) was able to post a gain of 3.0% as index heavy-weights Shell Plc and Total Energies have shown a strong share price performance during the month of March. Shell said it would boost investor returns through the end of this decade by reinforcing its position as the world’s top trader of liquefied natural gas. The London-based energy giant will expand LNG sales, the key driver of profit growth in recent years, by 4% to 5% annually until 2030, according to a statement. This will allow the company to return more cash to investors through share buybacks. After months of losses the S&P Global Clean Energy Transition Index gained by +2.2% in March. Most transportation segments were negative. The DJ Transportation Average Index (USD) fell by -7.6%. whereas the US Global Jets Index (USD) dropped by -14,8%. The Russell 2000 Marine Transportation Segment (USD) fell by -4,4%. Falling consumer confidence in the US and weaker guidance for US airline travel demand has led to a sell-off in US airline stocks. The freight services segment declined as FedEx has cut its full year financial guidance. Within the shipping sector most sub-segments were down. Despite crude tanker spot rates increasing by 5% for VLCC (Very Large Crude Carriers) and ca. 50% for Suezmaxes as well as Aframaxes to more than $ 50k/ day at the end of the month, most crude tanker stocks dropped. A potential deal to end the Russia/Ukraine conflict along with weaker than expected oil demand was a headwind for the overall tanker segment. The dry-bulk segment corrected sharply as global trade will be affected by tariffs and the pace of China’s recovery. The SCFI (Shanghai Containerized Freight Index) fell by another -10% in the month and thereby -22% year-on-year. Container liner stocks fell. Rates may face more headwinds as the Suez Canal may reopen in the 2nd half of 2025.
Fund Performance
The fund performance of the USD share class as well as EUR denominated share classes were negative. Within transportation the shipping long book had an overall negative contribution of -1,8%. Long positions in the crude/product, dry-bulk and offshore supply segments contributed a negative -0.3%, -0.3%, and -1,2% respectively. By selling our long position in Hafnia Ltd. in the beginning of March we have further reduced our product tanker exposure from 2.5% to 0% thereby mitigating the losses in this segment. A potential reopening of the Red Sea Passage would dampen tonne- mile demand in this tanker segment. Despite the fact, that the world-wide product tanker fleet is overaged, by now the order book has increased to a moderate level of 19.3%. Thereby any type of demand weakness may weigh on product tanker freight rates. This is in stark contrast to the crude tanker sub-segment where order books are ca. 45% lower at only 10.8%. This subsegment is less exposed to a normalisation of the red sea situation. Moreover, the US is further reinforcing its “maximum pressure policy” vis-à-vis Iran. During March, the department of State (US) has imposed further sanctions on entities engaged in the acquisition of Iranian petroleum. These were the first US measures targeting a Chinese “teapot refinery” processing crude oil. Further sanctions have the potential to drive-down Iran’s exports significantly. The shipment of up to 3mn barrels of crude oil per day on illicit old crude tankers would have to replace by modern tonnage instead. This could support crude tanker rates in the short to medium term.
On the other hand, the short shipping book had a positive contribution of +0.3%. Short positions in the container and dry bulk segments had a contribution of+-0.1% and +0,2% respectively. During the month the fund was able to benefit from a short position in Golden Ocean, which was nearly able to neutralise our long exposure in Genco Shipping. We have closed the position in Golden Ocean during the month as CMB Tech bought a 41% stake in Golden Ocean from John Fredriksen at a significant premium and a price of $14.49 per share. Although the purchase did not trigger a mandatory offer the short position was closed in the fund on the subsequent trading day at $ 8.96 as CMB Tech may purchase outstanding shares in the open market in order to gain control of the company. In the area of freight services, the short book (FedEx, UPS and DSV) had a positive contribution of +0.5%. FedEx shares fell after the company lowered its full year guidance for the third consecutive quarter, citing inflation and uncertain demand for shipments. Adjusted earnings are now expected to be in the range of $ 18 to $ 18.6 per share for the fiscal year, and revenue may be slightly down versus the last year. Thereby, the company has missed the average analyst estimate. FedEx also cautioned investors that an escalating trade war may weigh on the weakened demand situation even further. Long positions as well as short positions in other transportation stocks had a negative contribution of – 0.4% and – 0.2% respectively. Long positions in the aviation segment had a negative contribution of -2.2%. Given the weaker demand outlook for the US airline industry the airline exposure was further reduced from 15% of NAV to 8% of NAV at the end of the month. Delta Airlines lowered its guidance for the first quarter citing lower demand in the US and falling consumer confidence. As the tariff-dispute between Canada and the US further escalated during the month, the fund’s exposure in United Airlines and Delta Airlines was further reduced from 3.5% and 2.7% of NAV to 1.35% and 0.75% of its NAV throughout the month. Within the energy segment long positions in the oil & gas and oil services segment had a positive contribution of +0.4% whereas short positions had a negative contribution of -0,2%. BW Energy rose by 19.3% in the month as the company announced a substantial oil discovery with good reservoir quality on the Bourdon prospect in the Dussafu License offshore Gabon. Despite the recent share price increase BW Energy is trading with a significant discount versus its peer group based on the P/NAV valuation metric of 0.65 vs. 1.0. The company specific contribution to the performance result was +0.85%. The fund’s long position in the renewable segment had a positive contribution of +0.4%. Overall hedging positions via short index futures have contributed positively by ca. +0.4 % to the overall performance result.
For more information, you can find our latest Factsheet – March 2025.
Seahawk Investments GmbH
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