Index creeps higher as airlines take flight

By Pan Xiaoyi  |   2008-12-19  |     ONLINE EDITION

SHANGHAI'S key stock index changed little in the morning session after China cut fuel prices for the first time in almost two years after international oil prices slumped.

The Shanghai Composite Index lost 0.05 percent, or 1.05 points, to 2016.75 points.

The Shenzhen Composite Index, which tracks the smaller domestic market, was up 0.8 percent, or 4.96 points, to 622.22 points.

Starting today, the ex-factory price of gasoline was lowered 14 percent to 5,580 yuan (US$816) a metric ton, diesel prices were slashed 18 percent to 4,970 yuan per metric ton and jet fuel prices were cut 32 percent to 5,050 yuan per metric ton.

Airlines led the gains as jet fuel accounted for about 40 percent of Chinese carriers' costs in 2007, according to their annual reports. Lower domestic jet-fuel prices may help the nation's carriers, which have posted combined losses of 4.2 billion yuan in the first 10 months as they struggle with slower demand caused by the nation's cooling economy.

China Southern rose 3.88 percent to 3.75 yuan. China Southern buys about 80 percent of its fuel domestically and the price cut is estimated to help it save 58 billion yuan a year.

Air China, the nation's largest overseas carrier, gained 1.53 percent to 4.64 yuan.

China Southern's domestic traffic accounted for 85 percent of its total in the first 11 months, compared with China Eastern's 66 percent and Air China's 56 percent.

Crude oil fell below US$36 a barrel for the first time since June 2004 on the New York Mercantile Exchange yesterday.

PetroChina, the country's largest oil producer, fell 0.18 percent to 11.09 yuan. Its parent China National Petroleum Corp is reportedly going to lower capital spending by more than 10 percent next year due to the worldwide economic slowdown.

Sinopec, the country's biggest oil refiner, added 0.63 percent to 7.98 yuan.

Ping An Insurance (Group) Co, the nation's second-largest insurer, dipped 0.88 percent to 29.3 yuan. It said its life insurance unit booked 92.09 billion yuan in premium income in the first 11 months of this year, 28 percent more than a year earlier.

China Cosco Holdings Co jumped 2.94 percent to 9.11 yuan. The company said it may invest in port facilities, including terminals, in Taiwan's Kaohsiung City.