Source: China Daily HK Edition Author: Castor Pang 08/08/2008
Subject Concerned: Opinion Airlines Aviation Fuel
Cathay Pacific Airways
Cathay Pacific recorded a loss of HK$663 million during the first half of this year.
Its core business saw significant growth, but the company was dragged deep into the red by surging oil prices. The company has also made provisions for a substantial fine after it was found to have engaged in price-fixing practices in the US. Cathay's stock price dropped significantly on Aug. 7, at one point dipping to a low of HK$13.88.
Global oil prices have remained high in recent days, and although they're expected to fall, any decline is expected to be slow and ultimately unlikely to drive a quick rebound in the stock's price.
However, in terms of the short-term future, the stock broke its downward trend in April, and it may rebound to around the HK$14 mark.
Investors are advised to enter at HK$14 and speculate on a rally. Its short-term resistance lies at HK$16 and it is wise to sell when it dips below HK$13.40.
* The author is a strategist with Sun Hung Kai Financial Group.