LONDON: Shipping companies, refineries, freight derivatives or diesel cracks? Investment funds are placing their bets as the shipping sector prepares for new rules limiting sulfur emissions from ocean-going vessels.
Breakwave launched an exchange-traded fund last year to invest in dry bulk freight derivatives, hoping to benefit from IMO 2020."Rarely you see such a potentially massive disruption," said Kartsonas."Delays, a reduced active fleet supply, slow steaming and port congestion can push freight rates to decade highs, and beyond."
Svelland Capital is launching an"IMO direct exposure fund" in July aimed at investors who want to take positions based on IMO 2020, but are less familiar with oil derivatives. "You can try and pick winners in the shipping segment of the equity markets, but to get a pure play you need the derivatives market," Tveter said."The new fund will look at all the parts of refining that will be affected by the new regulations.
Fedeli said concerns about disruptions to global trade had weighed on refining margins and related stocks this year, but IMO 2020 could change that. Hedge fund CF Partners in London is focusing on price gaps between different crudes. It expects sweet crude with higher levels of distillates such as Nigeria's Bonny Light or U.S. shale to be more in vogue than heavier, sour crude.CF Partners is also getting exposure to U.S.-flagged ships known as Jones Act carriers after a law requiring goods shipped between U.S. ports to be transported in U.S. vessels.
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