SGX report: Marine and offshore stocks stuck in decline as oil prices slump

SINGAPORE - Listed companies in Singapore's marine and offshore industry saw a substantial decline over last year and the dip is still ongoing as oil prices continue to slump, the Singapore Exchange (SGX) said in a report on Jan 20.

The 20 largest capitalised stocks in the sector combined to an average decline of 20.2 per cent over the last 12 months, the bourse said in its latest My Gateway report. This comes as Brent futures closed at US$48.84 a barrel overnight, down over 55 per cent from the US$110 level in June last year.

The volatility in oil prices is expected to pressure oil producers' demand for offshore rigs and other marine engineering solutions, and share prices in the sector are floundering to reflect the bearish sentiments.

Against this backdrop, the sector's top 20 stocks, with market capitalisation reaching $46.1 billion, have also averaged a 2.1 per cent decline in year-to-date total return, which includes dividend.

Among them, the five biggest stocks - Keppel Corporation, Sembcorp Marine, Hutchison Port Holdings Trust, Yangzijiang Shipbuilding and Genting Hong Kong - averaged a 1.3 per cent drop in year-to-date total return, SGX said.

Despite the current struggle, analysts believe major companies in the sector will not be hit financially in immediate terms, as their order books have thus far remained steady.

The sector still offers some good choices for long term investment after the substantial drop in share prices, analysts noted, with OCBC Investment Research head Carmen Lee naming Keppel Corp as one of her top picks for 2015.