October 4, 2011 (Chinavestor) Fears that Europe won't be able to contain Greece's debt problems sent markets lower in globally. The Shanghai Composite Index (SHA:000001) escaped the fall only because the exchange is closed for the week in observance of a National Holiday. But the Hang Seng Index (INDEHANGSENG:HSI) tumbled 571.88 points or 3.5% on top of a 770.3 points or 4.6% dive a day before. Airliners continued to fall hard after Tony Tyler, chief executive officer of the International Air Transport Association and a former CEO of Cathay Pacific (HKG:0293), said that global economic slowdown is hurting profitability of the industry more than initially thought. Overcapacity and subdued ticket prices are a matter of concern, according to Tyler. China Southern Airlines (HKG:1055), the largest Chinese carrier by fleet size, fell 8.4%, the second most after Zijin Mining (HKG:2899), China's largest gold miner. CNOOC Ltd. (HKG:0883). China's offshore oil producer, slid 6.7% as price of crude fell. Chinese telecoms and upstream oil companies helped mitigate the fall of the Hang Seng Index (INDEXHANGSENG:.HSI). China Mobile (HKG:0941) and China Telecom (HKG:0728) fell a mere 1.7% and 0.4%, respectively. Sinopec (HKG:386), China's largest refiner, slid 1.4%.
Falling oil prices bode well for refiners and integrated oil companies for their refining margins improve. Sinopec (HKG:0386), has outperformed the broad market in September and is expected to do so as long as price of the crude softens. Falling oil prices may no offset losses from slumping demand for airliners, investors think after remarks from Mr. Tyler and fears that American Airlines (NYSE:AMR) may go bankrupt sent chills through the spine of investors. China Southern Airlines (HKG:1055) and China Eastern Airlines (HKG:0670) fell over 22% in just a matter f three days.
Pure oil producer, CNOOC Ltd. (HKG:0338), fell the hardest among major Chinese oil companies on Tuesday. Sinopec (HKG:0386) fell 1.4% followed by Petrochina Co. Ltd. (HKG:0857) and CNOOC Ltd. (HKG:0338).
China stock fell in-line with the broad Hang Seng Index (INDEXHANGSENG:.HSI) on Tuesday. The Hang Seng China Enterprises Index (INDEXHANGSENG:.HSCE) fell 305.68 points or 3.6%.