Covid-19 vaccine hope brings tailwind to Chinese airlines as CICC predicts a doubling in stock valuation
- Shares of China’s three biggest state-controlled carriers surged last week on the back of promising Covid-19 vaccine trials
- CICC says risk-on sentiment will double the valuation of the airlines’ stocks from near rock-bottom over the next two years
Shares of the nation’s biggest players including Air China and Shanghai International Airport jumped by as much as 13 per cent last week, after Pfizer and BioNTech said their vaccine candidate was more than 90 per cent effective in preventing infections during trials. That has also helped global stocks, make a third attempt at erasing the 34 per cent plunge induced by the viral outbreak in March.
“The key is to keep an eye on the recovery in international travel,” said Ming Xing, an analyst in Shenzhen at Essence Securities. “With the progress on the vaccine trials, there’s huge room for improvement and a resumption of international flights will be accelerated.”
The latest forecasts will put a floor under 66 billion yuan (US$10 billion) of destruction in the sector’s market value this year since the coronavirus outbreak in January. Globally, the air travel industry is seen incurring US$84.3 billion of losses this year, according to the International Air Transport Association. Lost revenue is estimated at US$419 billion.
