HK Stock Market Move | Airline stocks rise collectively; elevated jet fuel costs weigh on carriers' profits; institutions are bullish on falling oil prices to kick off a long-term logic

Airline stocks rose collectively. As of press time, Air China Limited (00753) gained 3.58% to HK$3.62; Beijing Capital International Airport (00694) rose 3.26% to HK$1.425; China Eastern Airlines (00670) climbed 3.25% to HK$2.38; China Southern Airlines (01055) advanced 2.94% to HK$2.80. On the news front, elevated jet fuel costs continue to erode carriers' profits. In the first three quarters of this year, Air China Limited, China Eastern Airlines, and China Southern Airlines reported net losses attributable to shareholders of RMB2.015 billion, RMB2.115 billion, and RMB4.305 billion, respectively, with combined losses still around RMB8.435 billion. In the third quarter alone, Air China Limited and China Eastern Airlines posted net profits attributable to shareholders of RMB271 million and RMB64 million, respectively, down 92.64% and 98.19% year-on-year; China Southern Airlines recorded a net loss attributable to shareholders of RMB609 million. It is worth noting that international oil prices plunged unexpectedly today, with Brent crude briefly falling below the US$110 mark. According to reports, citing CCTV News, on November 1 local time, Qatari mediators held talks with Iranian negotiators for a third consecutive day in hopes of facilitating a US-Iran agreement. Guotai Haitong pointed out that since September, airlines' operating strategies have begun to improve compared with the summer travel season, and in October, capacity control and price protection pushed ticket prices into positive year-on-year territory. It is expected that this will continue in the new season and help with oil price pass-through. Falling oil prices will kick off an upward shift in the profit center and the unfolding of a long-term logic.