HK Stock Market Move | Aviation stocks lead the way as geopolitical tensions ease and international oil prices fall. Institutions point out that the transmission of oil price pressure is better than market concerns.

Aviation stocks lead the way, as of the time of writing, China Eastern Airlines (00670) rose by 5.13% to HK$4.3; Air China Limited (00753) rose by 4.8% to HK$5.24; China Southern Airlines (01055) rose by 3.85% to HK$4.32; CATHAY PAC AIR (00293) rose by 3.56% to HK$12.52. On the news front, the international oil prices plunged significantly on Wednesday due to the easing of tensions in the Middle East. WTI crude oil and Brent crude oil prices fell by more than 10% at one point. It is reported that fuel costs typically account for one-fourth of the operating expenses of airlines. With aviation fuel prices surging from $85 to $90 per barrel before the US-Iran conflict to $150 to $200, major airlines are urgently taking measures to cope with the situation. Haitong of Cathay Pacific pointed out that the aviation market will enter the traditional off-peak season after the holidays, and the pressure from oil prices may continue to put strain on passenger flows in the short term. It is worth noting that the aviation supply and demand dynamics, along with the anti-internal consumption measures, will continue to help alleviate oil price pressure better than market concerns. Moreover, the significant increase in ticket prices on the China-Europe routes will further enhance the hedging capabilities of airlines like Air China. The combination of high oil prices and the off-peak season will provide a counter-trend opportunity.