Shipping ETF Sails on High Winds After Møller-Maersk Names New CEO
The shipping-related exchange traded fund caught a tailwind Thursday after A.P. Møller-Maersk A/S shares surged on a planned restructuring and new chief executive officer.
The Guggenheim Global Shipping ETF (SEA) , which tries to reflect the performance of the Dow Jones Global Shipping Index and holds high dividend-paying companies in the global shipping industry, rose 4.3% Thursday. SEA, though, was still down 10.2% year-to-date.
The shipping ETF popped after Møller-Maersk sought to unlock value fore shareholders by splitting its operating units, along with naming Søren Skou as the new CEO of Maersk Line, the Wall Street Journal reports.
“The question is whether we have the right structure or whether we should change it,” Chairman Michael Pram Rasmussen told the Wall Street Journal.. “Our companies are self-running, so the consideration is whether they should operate as independent units. Some may also be listed.”
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Møller-Maersk surged 11.9% on the announcement. The Danish conglomerate makes up 18.5% of SEA’s underlying portfolio.
The company said its board of directors will reveal further details about the restructuring plan by the end of the third quarter.
“The new CEO will take on the task of [determining] the possible new structure,” Rasmussen added. “This may include abolishing the group” as an umbrella holding company.
The Maersk shakeup is seen as a way to potentially alleviate the company’s floundering shipping business. The overall shipping industry is facing one of its longest-ever downturns due to excess capacity in the water and diminished global demand, which have dragged freight rates to levels barely parring fuel costs for the past year.
Related: Can The Shipping ETF Stay Afloat?
Rating agency Moody’s Investors Service even issued a warning on the state of the shipping industry due to plummeting freight rates and excess capacity that would eat away at profits at a faster-than-expected rate, downgrading its outlook for the industry to negative from stable.
For more information on the shipping industry, visit our shipping category.
Guggenheim Global Shipping ETF
