 Airlines up on oil price drop and M&A hope
(China Daily)
Updated: 2008-07-24 07:48  Most mainland shares fell yesterday, led by coal and non-ferrous metals producers, but airline stocks were strong, partly because of speculation about merger activity in the industry. The Shanghai Composite Index ended down 0.29 percent at 2837.85 points. Airlines climbed partly because of another drop in global oil prices overnight, and partly because major business magazine Caijing quoted an unnamed source as saying the central government and the Shanghai city government were discussing the possibility of merging Shanghai Airlines with China Eastern Airlines. China Eastern gained 4.16 percent to 7.78 yuan while Shanghai Airlines rose 4.13 percent to 6.57 yuan, coming well off a high of 6.89 yuan. Qiang Xiangjing, analyst at CITIC-Kington Securities, said a merger was quite possible as it would support Shanghai's status as an air transport hub, but any concrete news would probably take at least weeks to emerge -and even then, high oil prices could continue to weigh on the carriers' share prices. The overnight drop in global oil prices boosted oil refiner Sinopec, which gained 0.82 percent to 11.12 yuan, and hurt coal producers such as Panjiang Coal, which sank 6.98 percent to 25.68 yuan. Gold fell sharply overnight along with oil, and this hurt gold producing shares, with Shandong Gold down 5.06 percent to 59.5 yuan. Analysts said the market, which is up 11 percent from a 17-month low hit early this month, was likely to keep a firm tone in the short term, buoyed by the belief that authorities did not want any sharp fall before or during the Beijing Olympics in August. HK shares at 5-week high Hong Kong shares climbed 2.7 percent to a five-week high yesterday, as lower oil prices eased concern over the impact of high energy costs on businesses and consumers, while China Eastern Airlines surged the most in nine months amid talk of a possible merger. Airline stocks soared on the prospects of cheaper jet fuel and speculation of consolidation in the aviation industry after a report in a major business magazine said government officials were considering a merger between two mainland airlines. China Eastern Airlines shot up 11.8 percent and Shanghai Airlines jumped 4.1 percent. The mainland flag carrier Air China jumped 5.6 percent, while Cathay Pacific Airways climbed 6.3 percent. Agencies  (China Daily 07/24/2008 page15) |
