Capital A, AirAsia shares climb as crude oil prices ease further
KUALA LUMPUR (Nov 5): Shares of Capital A Bhd and AirAsia Group Bhd rose in early trade on Thursday, amid easing crude oil prices, although an analyst cautioned that the rebound may be short-lived given lingering geopolitical uncertainties.
Brent crude eased to around US$95 per barrel on Thursday. Jet fuel, which is typically priced at about a US$71 premium to crude, fell 2.6% from a week ago, according to Platts.
AirAsia Group shares climbed eight sen or 17.58% to 53.5 sen in the first 30 minutes of trading, after opening at 49.5 sen. The stock hit an intraday high of 57 sen before closing at 53.5 sen with about 86.78 million shares traded.
Meanwhile, Capital A gained three sen or 13.04% to 26 sen as at 9.25am, after opening at 24.5 sen, and closed at 25.5 sen at the end of the trading day with 53.34 million shares changing hands.
Both counters were among the 10 most actively traded stocks on Thursday.
An aviation analyst, who declined to be named, said the gains were largely driven by lower jet fuel prices, although it remains uncertain whether the rally can be sustained.
"It's definitely a positive development, but it's still not over yet," the analyst told The Edge, cautioning against becoming overly bullish as geopolitical tensions could flare up again.
“If it's anything we learned in the last eight months is that things can go south very fast,” said the analyst, who has a 'buy' call on the counter.
The analyst said high jet fuel costs had weighed on airline stocks in recent months, even when broader equity markets were performing strongly.
While the Ministry of Finance’s earlier indication of support for the aviation sector may have provided some reassurance for investors, the analyst viewed this as a secondary factor behind Thursday's gains.
The analyst added that sustained improvement in fuel prices and greater clarity on geopolitical developments would be needed before a more lasting recovery in airline stocks could take shape.
