Airlines lead stock market rally
By Lydia Chen |
July 27, 2011, Wednesday
|
Print Edition
Print Edition
SHANGHAI'S stock market yesterday rebounded from a one-month low on the strength of airlines amid speculation competition from the high-speed railway industry will ease after a fatal train crash on Saturday.
The Shanghai Composite Index rose 0.5 percent to 2,703.03. The benchmark plunged 3 percent on Monday to the lowest level since June 23.
Domestic airlines helped push the index higher on the supposition that travelers may turn to the air following the fatal train accident in Wenzhou, Zhejiang Province, which killed at least 39 people.
Shen Minggao, an analyst at Citigroup, said the tragedy will slow the pace of investment "at least in the near term" in subways, bridges and roads as well as in high-speed rail, which would affect demand for commodities. Airlines will benefit in the near-term from reduced competition, he said.
China Eastern Airlines, the nation's second-biggest carrier, surged by the daily cap of 10 percent to 5.60 yuan (US$0.87), its biggest gain since March 2009, after air ticket prices between Shanghai and Beijing rose.
China Southern Airlines, the nation's largest carrier, jumped 9.2 percent to 8.68 yuan. The Beijing-Shanghai route is China's busiest.
The rally among airlines contrasted with falls among rail-related shares, which extended their huge losses for a second day.
CSR, the country's biggest train maker by market value, sank 3.6 percent to 5.82 yuan, the lowest close since October 12. CSR made one of the trains involved in the train crash on Saturday.
China CNR, the nation's second-biggest train maker, slipped 4.1 percent to 5.63 yuan.
China Railway Construction, the builder of more than half the nation's rail links since 1949, lost 0.9 percent to 5.36 yuan.
You Bainian, a Shanghai-based fund manager at Fortune SGAM Fund Management, said: "The train accident has raised concern that the government will tighten approvals of investment projects."
The Shanghai Composite Index rose 0.5 percent to 2,703.03. The benchmark plunged 3 percent on Monday to the lowest level since June 23.
Domestic airlines helped push the index higher on the supposition that travelers may turn to the air following the fatal train accident in Wenzhou, Zhejiang Province, which killed at least 39 people.
Shen Minggao, an analyst at Citigroup, said the tragedy will slow the pace of investment "at least in the near term" in subways, bridges and roads as well as in high-speed rail, which would affect demand for commodities. Airlines will benefit in the near-term from reduced competition, he said.
China Eastern Airlines, the nation's second-biggest carrier, surged by the daily cap of 10 percent to 5.60 yuan (US$0.87), its biggest gain since March 2009, after air ticket prices between Shanghai and Beijing rose.
China Southern Airlines, the nation's largest carrier, jumped 9.2 percent to 8.68 yuan. The Beijing-Shanghai route is China's busiest.
The rally among airlines contrasted with falls among rail-related shares, which extended their huge losses for a second day.
CSR, the country's biggest train maker by market value, sank 3.6 percent to 5.82 yuan, the lowest close since October 12. CSR made one of the trains involved in the train crash on Saturday.
China CNR, the nation's second-biggest train maker, slipped 4.1 percent to 5.63 yuan.
China Railway Construction, the builder of more than half the nation's rail links since 1949, lost 0.9 percent to 5.36 yuan.
You Bainian, a Shanghai-based fund manager at Fortune SGAM Fund Management, said: "The train accident has raised concern that the government will tighten approvals of investment projects."
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