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Recent statements by President Donald Trump regarding potential changes in the status of the Panama Canal have raised concerns about possible impacts on various stocks and exchange-traded funds. After all, some 4% of global trade passes through the canal, with more than 70% of that traffic bound for or coming from the U.S., according to the Wall Street Journal.
What Happened: On Sunday, Secretary of State Marco Rubio warned Panama’s President José Raúl Mulino that Washington will “take measures necessary” if Panama does not immediately take steps to put an end to what Trump considers China’s influence and control over the Panama Canal.
Following the talks with Rubio, who is on a tour of Central America, Mulino signaled he would review agreements involving China and Chinese businesses. Since Trump took office, he has reiterated his threat to forcibly retake the Panama Canal, which generates some $2.5 billion in annual revenue for Panama.
As a critical conduit for international maritime trade, any changes to its operations could naturally affect companies involved in shipping, logistics and transportation.
Let's start with the shipping-owning company SFL Corporation Ltd. (NYSE:SFL), which is engaged in the ownership and operation of vessels and offshore-related assets. There are two others that could see changes: Costamare Inc. (NYSE:CMRE), which owns and charters container ships, and Navios Maritime Holdings (NYSE:NMPGY), an international owner and operator of dry cargo vessels.
Next, we have the railway companies that provide freight services across the U.S. These include CSX Corp (NASDAQ:CSX), Norfolk Southern Corp (NYSE:NSC), Union Pacific Corp (NYSE:UNP), Canadian Pacific Kansas City Ltd (NYSE:CP) and the Canadian National Railway Co (NYSE:CNI).
Now let's look at the ETFs that focus on all of the above — shipping, air freight and the courier industries.
U.S. Global Sea to Sky Cargo (NYSE:SEA), Breakwave Dry Bulk Shipping (NYSE:BDRY) provides exposure to the daily change in the price of dry bulk freight futures and SPRD S&P Transportation ETF (NYSE:XTN), which represents the transportation segment of the S&P Total Market Index ("S&P TMI") designed to track the broad U.S. equity market.
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