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Airline stocks surge on yuan hopes
By Winny Wang |
June 21, 2010, Monday
|
Online Edition
Online Edition
AIRLINES stocks surged today on anticipation that the possible yuan appreciation will cut their repatriated value of US dollar-denominated debts.
China Eastern Airlines, the country's second-largest carrier, will save about 300 million yuan (US$44.1 million) for every one percent rise in the value of the yuan against the dollar, according to Li Lei, an analyst at China Securities Co.
The Shanghai-based carrier's US dollar-denominated debt is equivalent to 30 billion yuan, which accounts for 60 percent of its total debts, said its board secretary Luo Zhuping.
"The appreciation of the yuan is definitely good news for airlines and it will also boost domestic consumption including air travel," Luo said. The carrier rose 5.59 percent to 7.93 yuan apiece today in Shanghai.
China's central bank said over the weekend that it will allow the yuan to become more flexible, the first such comment since it began keeping the rate stable at about 6.83 to the dollar in the middle of 2008, but it would maintain a stable exchange rate and didn't anticipate major changes in the value of the yuan.
Air China rose 6.44 percent to 11.73 yuan and China Southern Airlines rose 8.18 percent to 7.27 yuan.
China Eastern Airlines, the country's second-largest carrier, will save about 300 million yuan (US$44.1 million) for every one percent rise in the value of the yuan against the dollar, according to Li Lei, an analyst at China Securities Co.
The Shanghai-based carrier's US dollar-denominated debt is equivalent to 30 billion yuan, which accounts for 60 percent of its total debts, said its board secretary Luo Zhuping.
"The appreciation of the yuan is definitely good news for airlines and it will also boost domestic consumption including air travel," Luo said. The carrier rose 5.59 percent to 7.93 yuan apiece today in Shanghai.
China's central bank said over the weekend that it will allow the yuan to become more flexible, the first such comment since it began keeping the rate stable at about 6.83 to the dollar in the middle of 2008, but it would maintain a stable exchange rate and didn't anticipate major changes in the value of the yuan.
Air China rose 6.44 percent to 11.73 yuan and China Southern Airlines rose 8.18 percent to 7.27 yuan.
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