The Great Recession and What’s Stimulating Shipping Stocks

Author: T Nguyen
October 17, 2012

Even with the brunt of the Great Recession behind us, the global shipping industry has still seen companies slip into the deep blue of nonexistence. However, in the most recent month of market trading, some have bounced back with the best figures seen in years; we’re thinking about Ultrapetrol, whose stock soared 79.75% in the last 30 days, along with Star Bulk Carriers who were up about 20%.

Many are wondering what gives for the sudden upswing in the stock market while others are blinking in skepticism. There are a few factors that have played into this, chief among them, are the economic stimulus packages issued by central banks around the world.

On September 13th, 2012, Ben Bernake, Chairman of the Federal Reserve, announced his plan of Quantitative Easing 3. The plan essentially amounts to buying up vast amounts of mortgage-backed bonds in order to spruce up the economy (similar bullish measures from the governments of Japan and Europe). At the surface of things, this plan seems feasible and beneficial for everyone in the end: demand would drive manufacturers to increase production, who would then have to hire a larger staff to accommodate the demand, as well as more materials and equipment and so forth and so on.

While the shipping industry on the whole is a far cry away from total recovery from The Great Recession, things are on their way up no matter which side of the coin one looks at. Many companies weathered the storms of recessions past, and those that have been strongest in the previous five years will be those best positioned to see profit gains as the global recovery strengthens.

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