TPP set to jolt Singapore Shipping Corp’s earnings

Japan’s automotive exports are expected to boom.

The shipping company will sail through smooth waters ahead, thanks to a significant lift by the Trans-Pacific Partnership, which will remove tariffs on Japanese automobiles in North American markets.

According to analysts from RHB Research, once the agreement takes effect, the 2.5% US tariff on Japan’s automobiles will be eliminated in a span of 25 years.

“Conversely, US automobiles should enjoy easier access into Japanese markets (while there are no tariffs on US automobiles, there are “soft” barriers such as distribution etc),” RHB said.

Meanwhile, the Volkswagen scandal is also expected to increase demand for Japanese automobile brands.

As the demand for seaborne vehicle trade booming, SSC’s profits could be better than expected, given its strong link with Japanese shipping companies.

RHB also says its plan of doubling its fleet could also be more than a pipe dream.

“We believe that 2QFY16 should represent the full potential of its ship-owning business and future quarters should be similar,” RHB said.

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