Aviation stocks fly high despite woes in sector



PETALING JAYA: Despite the troubles that the aviation industry has encountered, airline stocks seem to have caught the fancy of investors and traders recently.

In the past three months, most regional aviation stocks were up 20% to 25% when the FTSE Bursa Malaysia KL Composite Index rose about 15% during the period.

“In aviation stocks, these gains are not surprising because they were in a trading range for months.

“One of the first signs that this would happen came when jet fuel prices did not fall even when demand had dropped slightly,” a Singapore-based analyst said.

He said there was upside potential for airline operators, given that the second half of the year was typically better in terms of financial performance compared with the first half.

“You don’t actually buy it today because the prices have gone up so much. The stocks are likely to correct and consolidate, and the chart suggests that an upside is possible.

“So these are stocks you want to watch and buy the next time they consolidate,” said the analyst.

Asked if investors were looking more favourably at airline stocks, OSK Research analyst Ng Sem Guan said: “No”.

Investors were on “trading mode”, given the recent positive news, he said, adding that AirAsia Bhd was back in the limelight on its corporate exercise.

Ng said airline stocks were traded range-bound with no significant variance and also in line with the overall equity market performance.

OSK has a “neutral” call on AirAsia, and a “sell” on Malaysia Airlines (MAS) and Singapore Airlines (SIA)

To a question, Ng said there was “no kicker to own airline stocks at this juncture.”

He said although passenger numbers were experiencing some “green shoot” from a very low level, it was nothing near the peak of last year.

Recently, International Air Transport Association revised the airline losses globally at around US$11bil this year, US$2bil higher than its US$9bil estimate in June.

Another analyst said airline stocks “often take a beating” in the wake of an air disaster, but those stocks were generally unscathed when word that debris was found from an Air France flight that vanished over the Atlantic Ocean in May.

“What’s interesting was, the manufacturer of the engine for the vanished aircraft saw its stock down fractionally but not the airline stocks,” he said.

“Perhaps the industry had become resilient to bad news, given the string of bad news from the beginning of the year.”

Locally, AirAsia added 1 sen, or 0.73% to RM1.38 and MAS gained 3 sen to RM3.06.

For latest Bursa Malaysia indices, charts and other information click here

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3

Did you find this article insightful?


Next In Business News

Inari sees strong demand for 5G RF components as Q1 net profit soars
PBA 3Q net profit jumps nearly 83% to RM11.3m
Majuperak returns to profit after three consecutive loss-making quarters
UEM Sunrise posts RM28.9mil loss in Q3�
Over 1,000 stocks in red on Budget, Top Glove woes
Hong Kong stocks track broader Asia higher on White House transition, vaccine hopes
CPOPC: AP report out to harm image of palm oil industry
Budget 2021 shows govt's determination to aid vulnerable groups, Zafrul says
JD Health to raise US$4b in HK's largest IPO of 2020
Brent hits highest since March, spurred by vaccine hopes

Stories You'll Enjoy