[ad_1]
SINGAPORE: Singapore Airlines’ stock price rose as much as 21 percent during intraday trading to a five-month high on Tuesday (Nov 10) as markets rallied on news that a candidate vaccine was 90 percent effective in treating COVID-19 patients. , fueling hopes of a return to normalcy.
SIA’s share price rose to a high of S $ 4.15, before closing 14 percent at S $ 3.91. This is the first time since June that SIA’s share price has risen above S $ 4.
On Monday, US drugmaker Pfizer said its experimental COVID-19 vaccine was more than 90% effective, a major victory in the fight against a pandemic that has killed more than a million people and hit economies.
Shares of airlines in Asia rose in hopes that people will be able to travel again, with Japan Airlines increasing by more than 20% and Cathay Pacific by 14%.
READ: SIA Group Reports First Half Net Loss of S $ 3.5 Billion As Passenger Number Falls 98.9% Amid COVID-19
In Asia, the Singapore Straits Times Index rose 3.67 percent, while Hong Kong’s Hang Seng Index rose 1.1 percent. Mumbai and Jakarta rose more than 1 percent, while Tokyo and Sydney also posted healthy gains.
Manila soared more than 5 percent, and traders also welcomed signs that the Philippine economy is improving despite a third consecutive quarter of contraction.
Seoul and Wellington also rose, although Shanghai and Taipei fell.
Daily FX strategist Margaret Yang said overall sentiment in the Singapore market on Tuesday was “invigorated” by hopes for the vaccine, with daily turnover on the Singapore Stock Exchange more than double than usual.
AIRLINE ACTIONS JUMPED AFTER ‘VACCINE OPTIMISM’
Ms Yang said airline stocks rose on “vaccine optimism”, raising hopes for a faster pace of normalization in business, travel and tourism.
“SIA’s share price was hit by another large pandemic wave in the EU and US in recent months. A breakthrough in vaccine development painted a ray of light for the aviation industry.” , said.
READ: SIA plans to use smaller jets for Singapore-Hong Kong air travel bubble
SIA’s share price has taken a hit since the COVID-19 outbreak earlier this year, with border restrictions in Singapore and around the world severely curbing travel.
Last week, the SIA Group reported a first-half net loss of S $ 3.5 billion, and said passenger traffic was down 98.9 percent.
SIA has grounded most of its fleet and cut 4,300 jobs, or about 20 percent of its staff.
The airline has secured S $ 11.3 billion in new liquidity in the last six months, including S $ 8.8 billion raised through the issuance of rights and another S $ 2 billion guaranteed through loans to long-term guarantees on some of their aircraft.
New committed lines of credit and a short-term unsecured loan also provided additional liquidity in the amount of around S $ 500 million.
While SIA has suffered huge losses due to a sharp decline in passenger numbers and impairment charges on older jets, the group has seen strong demand for cargo in areas such as pharmaceuticals, perishables and e-commerce.
The airline has also taken steps to capitalize on this demand by removing seats on some of its passenger jets to carry more cargo.
READ: Singapore Airlines confident of having ‘very strong liquidity’ as it explores new sources of funds to overcome COVID-19: CEO
READ: COVID-19: Singapore to lift border restrictions for visitors from mainland China and Australia’s state of Victoria from November 6
The group has said that the recovery from the COVID-19 pandemic is “likely to remain patchy” given new waves of infection around the world and concerns about imported cases into countries.
However, optimism is slowly beginning to return as countries gradually begin to allow travelers to visit them.
Singapore has also started easing some border restrictions, the most recent being visitors from mainland China and Australia’s state of Victoria that was allowed into the country since last week.
Last month, Singapore and Hong Kong also reached an agreement in principle to establish a bilateral air travel bubble, which will exempt travelers from quarantines or stay-at-home notice. Those traveling under the bubble will also have no restrictions on the purpose of their trip and will not need to have a controlled itinerary.
READ: The Big Read: Shot Down by COVID-19, Can SIA Fly Again? The fate of the Singapore Aviation Center depends on it
IG’s senior market strategist Ms Pan Jingyi said investor confidence and stock prices may stay afloat in the short term.
“If the path remains positive, advancing the reopening schedule globally would only further accelerate the HIA recovery to pre-pandemic levels,” said Ms Pan.
Meanwhile, the optimism surrounding the vaccine may provide short-term support for SIA’s stock prices, but a fragile economic outlook in the face of rising COVID-19 infections worldwide may put the price on its shares at risk of reversal, Ms. Yang said.
“More importantly, it may take a few months before the vaccine is shown to be successful and publicly available. The manufacturing capacity, storage and transportation of the vaccine are also some of the future challenges,” he added.
CHECK THIS: Our comprehensive coverage of the coronavirus outbreak and its developments
Download our app or subscribe to our Telegram channel for the latest updates on the coronavirus outbreak: https://cna.asia/telegram
