Industry Outlook: The container shipping industry is expected to face challenges, with BofA Securities predicting an EBIT loss in 2026 due to oversupply and the reopening of the Red Sea route.

Vessel Supply Impact: Significant growth in vessel supply in the first half of 2026 will contribute to the industry's struggles, compounded by the reopening of the Red Sea route in the second half of the year.

Investment Recommendations: BofA Securities has maintained an Underperform rating on COSCO SHIP HOLD and OOIL, advising investors to be cautious of negative developments related to the Red Sea route.

Market Conditions: The report highlights the potential for declining spot freight rates as port congestion eases and seasonal factors weaken, which could further impact the shipping market.

Market Performance: The Hang Seng Index (HSI) fell by 78 points (0.3%) to close at 26,844, while the Hang Seng China Enterprises Index (HSCEI) dropped 46 points (0.5%) to 9,220, with a total market turnover of $255.08 billion.

Active Heavyweights: Notable declines were seen in Xiaomi (-2.0%), Ping An (-1.3%), and Tencent (-0.7%), while Alibaba experienced a slight increase of 1.0%.

Significant Movers: Pop Mart saw a significant drop of 5.6%, while Techtronic Industries and Li Ning reported gains of 4.9% and 4.3%, respectively, with some stocks hitting new highs.

Top Gainers in HSMI & HSSI: Synagistics surged by 17.8%, followed by XXF with a 13.1% increase, and several other stocks also reported substantial gains, indicating a mixed performance across different sectors.

Market Performance: The Hang Seng Index (HSI) fell by 71 points (0.3%) to 26,851, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also experienced declines.

Active Heavyweights: Notable movements included Xiaomi and Ping An, both down approximately 1.6%, while Alibaba saw a slight increase of 1.1%.

Significant Declines: Ali Health and Pop Mart faced substantial drops of 6.3% and 4.8%, respectively, with Pop Mart experiencing high short selling activity.

Top Gainers: Techtronic Industries and Li Ning reported gains of 4.8% and 4.0%, respectively, with several companies hitting new highs in their stock prices.

Resumption of Shipping Routes: Maersk will resume its shipping route from India and the Middle East to the US East Coast via the Red Sea and Suez Canal, following similar moves by CMA CGM and the Ocean Alliance.

Impact on Freight Rates: The resumption of these routes is expected to increase shipping capacity by 7-8%, leading to a forecasted decline in freight rates by 9-16% this year, contingent on ongoing disruptions in the Red Sea.

Financial Risks for Shipping Companies: A potential 10% drop in freight rates could significantly impact Maersk's EBIT margin, resulting in losses for both Maersk and Hapag-Lloyd.

Investment Ratings: HSBC Global Investment Research has assigned a Buy rating to Maersk due to its logistics and terminal operations, while maintaining Underweight ratings for COSCO SHIP HOLD and OOIL, and a Hold rating for SITC.

Airline Stock Performance: Air China, China Southern Airlines, and China Eastern Airlines experienced declines in share prices, while BOC Aviation and Travelsky Tech saw slight increases, with most airlines rated as "Overweight" by analysts.

Short Selling Activity: Significant short selling was noted across various airlines, with China Southern Airlines having the highest ratio at 18.053%, indicating investor skepticism about future performance.

Express Delivery Platforms: ZTO Express is rated "Overweight," while J&T Express and JD Logistics faced minor declines, with both rated as "Equalweight."

Shipping Sector Overview: COSCO Ship Energy showed a positive performance with a 3.431% increase, while other shipping companies like SITC and OOIL experienced declines, with varying ratings from "Overweight" to "Underweight."