BDI Index Reaches New High, Shipping Sector in Hong Kong Stocks Leads Rally, In-depth Analysis of Investment Opportunities

BDI Index Continues to Climb, Shipping Sector Performs Strongly Against the Trend

On August 19, 2026, the global shipping market brought good news. The Baltic Dry Goods Index (BDI) closed at 2850 points, up 2.8% from the previous trading day, marking a new high for the year. As a barometer for the global dry bulk shipping market, the continuous rise in the BDI index reflects the recovery in global trade demand, especially the increase in demand for bulk commodity transport. Consequently, the shipping sector stocks performed actively, with the Evergreen Shipping Index rising 3.2% throughout the day, leading the Hang Seng Index constituents. Among them, CNOOCLI (0199.HK) rose 4.5%, Merchants Ferry (0158.HK) rose 3.8%, Pacific Shipping (2343.HK) rose 5.2%, becoming the leading stock in the sector.

Why is the BDI Index Rising?

The rise in the BDI index is mainly driven by the following factors: First, the recovery in the global economy has boosted demand for the transport of bulk commodities such as iron ore and coal. According to the latest report from the International Monetary Fund (IMF), the expected global economic growth from 3.2% was raised to 3.5% in 2026, with emerging markets contributing the majority of the growth. As China is the world's largest importer of bulk commodities, the increasing imports of iron ore and coal have driven the activity in the dry bulk shipping market. Second, geopolitical factors have led to tensions in some shipping routes. For example, the tense situation in the Red Sea region has caused some cargo ships to reroute around Cape of Good Hope, increasing transportation costs and time, which pushed up freight rates. Furthermore, the arrival of the summer oil consumption peak has driven demand in the oil transport market, indirectly affecting freight rates in the dry bulk market.

Diversification in Shipping Sub-sectors, Oil Transport Stocks Benefit Clearly

Within the shipping sector, performance has diversified across different sub-sectors. In the dry bulk transport area, stocks related to the rise in the BDI index have shown strong performance. CNOOCLI, as the world's largest dry bulk shipping enterprise, saw its freight rate index (BCI) rise in tandem, driving its stock price higher. In the oil transport area, the combination of the summer oil consumption peak and geopolitical factors has led to record high freight rates for VLCC (Ultra Large Crude Carriers), with oil transport stocks like Merchants Ferry and Pacific Shipping performing outstanding. In container transport, although the global container freight rate index (SCFI) has retreated, some routes remain stable, such as the Asia to Europe route, driving the rise of related stocks.

Dry Bulk Transport: The Barometer of the BDI Index

Dry bulk transport is a core component of the shipping sector, and the trend of the BDI index directly reflects the market sentiment in this area. Since the beginning of 2026, the BDI index has climbed from 1800 points at the start of the year to the current level of 2850 points, a rise of over 58%. This increase is mainly due to the recovery in the Chinese economy and the increase in global bulk commodity demand. CNOOCLI, as the leading enterprise in dry bulk transport, saw a year-on-year increase in net profit of 35% in the first half of 2026, mainly benefiting from rising freight rates and increased volume. Furthermore, the company improved operational efficiency by optimizing its fleet structure, further enhancing its profitability.

Oil Market: Dual Drivers of Summer Oil Consumption Peak and Geopolitics

Oil transport market will face peak oil consumption in the summer of 2026, compounded by geopolitical factors, leading to sustained price increases. VLCC daily charter rates have risen from $30,000 at the beginning of the year to the current $55,000, an increase of over 80%. As the largest oil transport enterprise in China, its VLCC fleet accounts for over 10% of the global fleet, benefiting from rising freight rates, resulting in a year-on-year increase in net profit of 42% for the first half of 2026. Furthermore, geopolitical factors causing some oil tankers to reroute have increased demand for transport capacity, further pushing up freight rates. For example, the tense situation in the Red Sea region has led some oil tankers to reroute around the Suez Canal, increasing shipping distance and raising freight rates. Container shipping: Freight rates decline but demand remains stable. The container shipping market performed relatively stable in 2026. The global container freight index (SCFI) declined from 1200 points at the beginning of the year to the current 950 points, but it remains above the 800 points of the same period in 2025. Freight rates on Asia-Europe routes remained stable, mainly due to the recovery of the European economy and increased consumer demand. China Shipping Group (2038.HK), as the leading container shipping enterprise, saw a year-on-year increase in net profit of 18% for the first half of 2026, mainly due to growth in container manufacturing and stable transport business. Additionally, the company increased its market share by expanding new routes, further enhancing profitability. Southbound capital continues to increase holdings, favoring the shipping sector. On August 19, 2026, southbound capital single-day net purchases in the shipping sector exceeded HK$2 billion, marking a new high for the year. Among them, stocks such as CNOOCL, China Shipping Group, and Pacific Shipping experienced significant increased holdings by southbound capital. The continuous inflow of southbound capital reflects investor optimism for the shipping sector. On one hand, the valuation of the shipping sector is at a historical low, with a Price-to-Earnings (PE) ratio of only 8 times, lower than the Hang Seng Index's 12 times, indicating significant room for valuation recovery. On the other hand, the performance growth certainty of the shipping sector is strong, with a year-on-year increase in net profit of 35% for the first half of 2026, higher than the Hang Seng Index's 15%, demonstrating strong profitability. Why is southbound capital favoring the shipping sector? Southbound capital favors the shipping sector for the following reasons: First, the performance growth certainty of the shipping sector is strong. The recovery of the global economy and increased trade demand are leading to sustained growth in freight rates and volume for shipping companies, with further performance improvement expected. Second, the valuation of the shipping sector is at a historical low, with significant room for valuation recovery. For example, CNOOCL has a PE ratio of only 8 times, lower than its historical average of 12 times, indicating significant upside potential. Furthermore, the shipping sector has a relatively high dividend payout ratio, with CNOOCL's dividend payout ratio around 5%, higher than the Hang Seng Index's 3%, attracting the attention of value investors. Industry Background: The Impact of Global Trade Recovery and Geopolitics The performance of the shipping sector is closely related to the recovery of global trade. Since 2026, global trade volume has grown by 4.5% year-on-year, higher than 3.2% in the same period in 2025, indicating a trend of global trade recovery. The trade growth between China and ASEAN, and the EU has been particularly notable, driving activity in the shipping market. Furthermore, geopolitical factors also impact the shipping market. The tense situation in the Red Sea region has led some cargo ships to reroute, increasing transportation costs and time, pushing up freight rates. The tense situation in the Middle East also affects demand in the oil transport market, causing VLCC freight rates to continue rising. Global Trade Recovery: The "Stimulant" for the Shipping Market The recovery of global trade is a major support for the shipping market. In 2026, global trade volume is expected to grow by 4.5% year-on-year, with emerging markets contributing the majority of the growth. China, as the world's largest trading nation, is projected to see a 5.2% year-on-year increase in imports and exports, driving demand in the shipping market. Furthermore, economic growth in ASEAN countries is boosting trade demand, for example, Vietnam's import and export volume is expected to grow by 6.8%, becoming a new growth point in global trade. These factors collectively drive activity in the shipping market, leading to sustained growth in freight rates and volume for shipping companies. ### Geopolitics: The Double-Edged Sword of the Shipping Market Geopolitical factors have a complex impact on the shipping market. On one hand, geopolitical tensions lead to capacity shortages on certain routes, pushing up freight rates. For example, tensions in the Red Sea region cause some cargo ships to reroute, increasing shipping distance and raising freight rates. On the other hand, geopolitical tensions can also lead to a decline in trade demand, affecting the performance of the shipping market. For example, tensions in the Middle East could lead to a decrease in oil demand, impacting demand in the oil transport market. Therefore, investors need to closely monitor geopolitical dynamics and adjust investment strategies in a timely manner. ## Investment Strategy Recommendations: Focus on Low Valuation and Earnings Growth The shipping sector of port stocks offers significant investment opportunities for investors. Firstly, the shipping sector's valuation is at a historical low, with a Price-to-Earnings ratio of only 8 times, lower than the Hang Seng Index's 12 times, indicating significant room for valuation recovery. Secondly, the shipping sector has strong earnings growth certainty; net profit is expected to grow by 35% in the first half of 2026, higher than the Hang Seng Index's 15%, demonstrating strong profitability. Furthermore, the shipping sector has a relatively high dividend payout rate, with China Merchants Overseas Shipping's dividend payout rate around 5%, higher than the Hang Seng Index's 3%, attracting the attention of value investors. ### Focus on Leading Companies in Niche Segments Within the shipping sector, investors should focus on leading companies in niche segments. In dry bulk transport, China Merchants Overseas Shipping is the largest dry bulk shipping company globally, and its freight rate index (BCI) is rising, driving stock prices up. In oil transport, China Merchants Shipping is the largest oil transport company domestically, with its VLCC fleet accounting for over 10% of the global fleet, benefiting from rising freight rates and expected further earnings improvement. In container shipping, China Shipping Group is the leading company in container shipping, with stable growth in both its container manufacturing and transportation businesses, indicating high investment value. ### Beware of Risk Factors Despite the significant investment opportunities in the shipping sector, investors must also be aware of risk factors. Firstly, the recovery of global trade may fall short of expectations, leading to a decline in demand in the shipping market. Secondly, geopolitical tensions may intensify, leading to capacity shortages or a decrease in trade demand. Furthermore, freight rates in the shipping sector fluctuate significantly, which may affect their earnings performance. Therefore, investors need to closely monitor changes in global trade, geopolitics, and freight rates to adjust investment strategies in a timely manner.