Aviation Stocks Rebound Collectively as Fuel Futures Fluctuate Amid Geopolitical Tensions; Iranian President Signals Ceasefire

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Aviation stocks experienced a collective rebound. As of the latest update, AIR CHINA (00753) rose 5.25% to HK$4.81; CHINA EAST AIR (00670) increased 5.44% to HK$3.68; CHINA SOUTH AIR (01055) climbed 4.87% to HK$4.09; and CATHAY PAC AIR (00293) gained 4.72% to HK$11.75.

According to Iranian media reports, Iranian President Pezeshkian stated on March 31 that Iran is prepared to end its current retaliatory actions against U.S. and Israeli aggression, provided it receives concrete guarantees against future attacks.

CITIC Futures noted that geopolitical tensions remain the primary driver of oil prices, with fuel futures fluctuating at elevated levels due to the situation. China Merchants Securities pointed out that recent rapid oil price increases, driven by escalating Middle East tensions and potential disruptions to the Strait of Hormuz, have significantly impacted aviation stocks. Should the Middle East situation improve, the negative sentiment suppressing airline stocks and pushing up oil prices is expected to ease. However, caution is advised regarding the potential erosion of profits from short-term oil price spikes and sustained high prices in the medium term.

It is anticipated that fuel surcharges will see a significant increase in April. Attention is recommended on actual ticket price performance and the ability to cover rising fuel costs.

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