Abstract
This work explained why only 31, out of about 1000 Greek-owned global shipping companies, raised from $1 b to $21 b from the international stock exchanges (mainly NYSE & NASDAQ), since mainly 2005. First, we thought that by analyzing the advantages and disadvantages of an IPO, we could possibly provide this answer, but these found almost balanced. We drew several times on Keynes. We found that Greek shipowners consider their profession as a way of life, and they dislike the function of Stock Exchanges where a separation of ownership from management can be accomplished. Surprisingly, we found that also Stock Exchanges dislike shipping sector, mainly for its volatility! Volatility—we showed—to be a coin with two sides: one side is that earnings, NAVs, etc. are not stable, creating risk and unreliability—this side is looked-up by Stock Exchanges and banks; the other side is that of reality, because shipping sector is a cyclical one, with 8 years on average duration, providing thus—as shown—great opportunities for extremely profitable asset appreciation, which is known as “asset play”! If banks, and stock exchanges, learned-well shipping sector, they had to provide finance at rock bottom earnings, and not at high, as they do, and for a longer tenor than 4 years (to prove this we used a number of case-studies). We showed, however, the high detrimental sensitivity of banks and stock exchanges to global financial crises, like that at the end-2008. Greek-owned shipping lost 2/3 of its capitalization within 10 months, and given that crisis continued till 2020, they were unable to get finance! Finally, to avoid spreading-out a cloud of pessimism in a world under the shadow of the Pandemic, and given that shipping sector is unpredictable, but well-managed, we proposed “management by visioning” based on Chaos Theory.
Highlights
Economy, all along, adapted to the needs of those who produce
We found that Stock Exchanges dislike shipping sector, mainly for its volatility! Volatility—we showed—to be a coin with two sides: one side is that earnings, NAVs, etc. are not stable, creating risk and unreliability—this side is looked-up by Stock Exchanges and banks; the other side is that of reality, because shipping sector is a cyclical one, with 8 years on average duration, providing —as shown—great opportunities for extremely profitable asset appreciation, which is known as “asset play”! If banks, and stock exchanges, learned-well shipping sector, they had to provide finance at rock bottom earnings, and not at high, as they do, and for a longer tenor than 4 years
Summarizing, it is remarkable to found-out, by almost a dozen studies reviewed above, that shipping βs are less than 1, and risk is low! This is against our experience, which says that shipping sectors, excluding containerships, are risky and volatile, as we showed this in relation to the global financial crisis in end-2008
Summary
Money, terminating the inconvenience caused by exchanging goods for goods (Barter Economy). Economies established an important institution: the banks, where money from savings could be deposited, and earn an interest. Bankers realized that people deposit their savings in the banks, but rarely come all at once to withdraw them, under normal circumstances If this happens it means bankruptcy—which happened in 1929-1933. Banks dominated in the finance of the Greek-owned shipping companies: in end-2006 they devoted $46 b; in 2014, $64 b and, in 2015, $63 b, three times more than those raised from Stock Exchanges-SEs in Jan. 2008 of $21 b. (“Philadelphia SE”), and in 1792, established the well-known NYSE, preferred by Greek-owned shipping companies along with NASDAQ14, which established in August, 1971 Both Banks and certain Stock Exchanges became. The index covers the transportation of raw materials and those for constructions, coal, grain, iron ore etc
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