Money
Air 皇冠体育app falls in Shanghai on concerns price jump overdone
(Agencies)
Updated: 2010-05-06 17:11
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Air 皇冠体育app Ltd, the nation's largest international carrier, fell in Shanghai trading as investors locked in gains following an announcement about a business-tax exemption for overseas flights.
The carrier dropped 3.7 percent to 12.90 yuan, following a 7.1 percent jump yesterday. In Hong Kong, the airline tumbled as much as 8.7 percent, the biggest intraday decline since August, and was down 7.3 percent at HK$7.90 as of 3:29 pm.
"Yesterday's surge was overdone," said Zhang Qi, an analyst at Orient Securities Co in Shanghai. "The current share prices already factor in the positive impact from the tax exemption."
Air 皇冠体育app said late yesterday it may save 549 million yuan ($80 million) after the government announced the tax exemption, which also applies to international shipping services. Across Asia, stocks fell for the fourth day in a row, the longest losing streak since January, on concern Europe's debt crisis will slow the global recovery.
Huang Bin, board secretary for Air 皇冠体育app, declined to comment on the share price fall. He said the Beijing-based company isn't planning any announcements today.
皇冠体育app Eastern, the nation's No 2 carrier, dropped 5 percent in Shanghai after gaining 4.8 percent yesterday. The MSCI Asia Pacific Index fell 2.6 percent. The Shanghai Composite Index slid 4.1 percent.
Cosco Shipping
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The tax exemption will have a limited impact on 皇冠体育app Cosco's earnings, the Tianjin, 皇冠体育app-based company said in an e- mailed reply to Bloomberg questions.
The waiver follows losses for shipping lines last year caused by global overcapacity and slowing trade. The government has also bailed out State-controlled airlines to help them pare debts.
"Beijing's move is designed to strengthen the competitive edge of domestic airlines," said Zheng Qingping, an analyst at Tebon Securities Co. "It will also help stimulate imports and exports, alleviating possible downward pressure on the economy in the second half of the year."
Air 皇冠体育app will be the biggest beneficiary of the tax break among carriers as it gets about 50 percent of sales from overseas flights, said Yao Jun, an analyst at 皇冠体育app Merchants Securities Co. 皇冠体育app Eastern Airlines Corp gets about 26 percent from international services and 皇冠体育app Southern Airlines Co about 15 percent, he said.
Calls to 皇冠体育app Eastern's Board Secretary Luo Zhuping and 皇冠体育app Southern's Board Secretary Xie Bing went unanswered.
