COSCO SHIP ENGY surges 18% on HSBC upgrade as Hormuz reopening nears

Key Takeaways:

• HSBC upgraded COSCO SHIP ENGY to Hold from Reduce
• Shares surged 18% to HKD 16.8 on potential Hormuz reopening
• Price target maintained at HKD 13.5, implying 19.6% downside

COSCO SHIP ENGY (01138.HK) jumped as much as 18.1% to HKD 17.76 on Monday, the biggest single-day gain in more than a year, after HSBC Global Investment Research upgraded the tanker operator on expectations that a reopening of the Strait of Hormuz will boost freight rates.

"The potential reopening of the Strait of Hormuz would be a clear positive for tanker fundamentals," HSBC Global Investment Research said in a note dated June 15. The broker raised its rating to Hold from Reduce, citing a more balanced risk-reward profile after the stock retreated 38% from its peak.

The stock traded at HKD 16.8 as of 3:30 p.m. in Hong Kong, with turnover reaching HKD 858 million, more than triple the 20-day average. HSBC kept its price target at HKD 13.5, implying about 19.6% downside from current levels. The broker also upgraded the A-share listing COSCO SHIPPING ENERGY (600026.SH) to Hold from Reduce, with a target price of RMB 17.2.

The upgrade comes as the US and Iran reached a peace agreement late Sunday to end months of fighting and reopen the Strait of Hormuz, through which roughly a fifth of global oil and liquefied natural gas flowed before the conflict began Feb. 28. The strait is expected to reopen once both sides formally sign the accord, potentially as soon as Friday. Brent crude has retreated to below $85 a barrel from a March peak of $118, though analysts at Reuters warned that a durable flow of around 16 million barrels per day — down from a pre-war peak of nearly 20 million — is a more plausible near-term outcome.

HSBC maintained its 2026 net profit forecast for COSCO SHIP ENGY at RMB 11 billion. The broker cautioned that long-term tanker market fundamentals remain challenging as the industry enters a new vessel supply cycle, with strong new tanker orders translating into risks of long-term oversupply.

The surge puts COSCO SHIP ENGY's shares at their highest since early May, though they remain 26% below the 52-week peak. Investors will watch for the formal signing of the US-Iran accord later this week as the next catalyst for tanker stocks.

This article is for informational purposes only and does not constitute investment advice.