Last night the Baltic Dry Index (BDI) fell 298 points and broke the crucial 6000 mark to close at 5948. The BDI is a proxy to dry bulk shipping freight rates.
I reiterate my view that investors who are looking to buy dry bulk shipping stocks for 2H08's potential freight rate rebound (after a seasonally low in early part of the year) should wait for the BDI to stabilise before entering the stocks. At this juncture, it is hard to predict where dry bulk shipping rates are going to land.
I continue to hold the view that dry bulk shipping stocks at best are trading stocks in 2008. Investors should look to trim these stocks as 2009 approaches. The current large ship orderbook of 56% of global fleet is indeed a concern and will lead to excess fleet capacity from 2009 onwards.
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