Director’s Cut --Peak containerisation :: Macquarie Research,

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Director’s Cut
Peak containerisation
Contrary to the view of some industry observers, after counting container
volumes through 200 global ports, Robert Joynson thinks the second half
inventory rebuild is likely to be weaker than the market expects.
He says the market currently looks at low inventories-to-sales in US retail and
assumes an inventory rebuild is required in the second half. However, while
manufacturing inventories remain well above trend, retail inventories are taking a
structural shift down as companies would rather miss a sale than repeat the pain
in early 2009 of having to liquidate excess inventory.
Robert Joynson is also forecasting global container volumes for the peak August
to October period to be only 4% higher than in the second quarter, compared to
a normal increase of 6%. He sees a weaker medium-term outlook than the
market expects, with the expectation that container rates will grow at only 1.8
times GDP over the coming years compared to 3.9 times during 2002-08. The
key reason for the slowdown is maturity in the outsourcing of manufacturing from
Europe and North America to Asia, which occurred in 2007.
Moving forward the growth areas will be Intra-Asia, Asia-ME and Asia Africa,
while Asia-Europe and TransPacific will be lower growth. With no rebound in
freight rates expected until a meaningful amount of capacity is removed, Robert
therefore maintains his Underperforms on AP Moller Maersk (MAERSKB DC)
and Hamburger Hafen und Logistik (HHFA GR)


Highlights
 Paul Cavey still expects looser monetary policy in the second half, saying
China’s high inflation number was largely driven by pork.
 After looking at the latest auto sales data, Jens Schattner still likes BMW
(BMW GR) and Zhixuan Lin likes Great Wall Motor (2333 HK).
 Daniel Chang recommends to buy Apple iPhone suppliers like Hon Hai
Precision (2317 TT), TXC (3042 TT) and Catcher (2474 TT).