TWO YEARS AFTER the global financial crisis, the container-shipping industry looks like it is headed for an even deeper slump.

 

Amid the worsening debt crisis in Europe and high unemployment in the US, global economic growth is once more under threat. Recently, the Purchasing Managers’ Indices in Europe and China, which were rising last year, have started falling once more, according to data presented by Nomura. As consumers from Barcelona to Beijing turn more tight-fisted, demand for everything from household appliances to designer clothes is weakening, slowing the flow of these goods from factories to department stores around the world and making it tougher for shipping companies to fill their container vessels.

THE PAST WEEK couldn’t have ended on a weaker note, what with the closing of a disappointing 3Q2011 earnings reporting season and weaker than expected October exports, which were down 16.2 % y-o-y, the worst figures in 30 months and more than double what economists had expected for the period.

 

Already bruised and battered by Europe’s debt crisis and stagnation in the US, the local bourse took a further hit, with the Straits Times Index falling almost 100 points during the week to close at 2,739 points on Nov 18. As such, research houses in Singapore have released a flurry of reports recommending investment strategies and value buys to ride the upcoming quarters -- which most believe could be as bleak as the recent 3Q, or worse.

BUOYED BY THE European Central Bank’s unexpected 25 basis point interest rate cut to 1.25% on Nov 3, the Straits Times Index -- led by jumps in Jardine Matheson, Jardine Strategic, Overseas China Bank Corp and DBS Holdings -- opened on a high note on Nov 4, rising 1.9% to 2,863 points from the day before.

 

The ECB lowered rates partly because “what we’re observing now is slow growth heading toward a mild recession by the end of this year,” President Mario Draghi said during his first press conference in Frankfurt. However, the new president made no mention of plans to rescue the region’s weakest nations and warned that growth forecasts for the Eurozone in 2012 were likely to be cut owing to sluggish demand.