Aviation stocks advanced during morning trading. At the time of writing, CHINA EAST AIR (00670) rose 4.64% to HK$4.06, while CHINA SOUTH AIR (01055) increased 3.37% to HK$4.30. AIR CHINA (00753) gained 3.19% to HK$5.18, and CATHAY PAC AIR (00293) was up 2.24% to HK$11.87.
Market sentiment was influenced by weekend developments in the Middle East, where the situation remained unclear within a 72-hour window. The Strait of Hormuz transitioned from being fully open to closed again, accompanied by the United States seizing an Iranian cargo ship. Former President Trump threatened to destroy Iranian infrastructure, and Iran declined to confirm attendance at the next round of negotiations. International oil prices experienced significant volatility, with Brent crude hovering around $94 per barrel at the time of writing.
Additionally, according to forecasts from Flight Master, average daily flights during the 2026 May Day holiday are expected to reach nearly 16,300, representing a 0.4% year-on-year increase compared to 2025. Civil aviation passenger volume is projected to be approximately 11.359 million, with a daily average of nearly 2.272 million, an estimated 1.9% rise compared to 2025.
Cathay Haitong Securities noted that recent substantial fare hikes have coincided with limited declines in passenger traffic, suggesting that the impact of oil prices may be significantly less than market concerns. The firm reiterated its view on contrarian opportunities. Following a significant increase in domestic fuel surcharges on April 5, 2026, recent domestic base airfares have also risen by over 100 yuan year-on-year. The bank estimates that domestic fares including fuel surcharges have increased by more than 20% year-on-year, which is expected to largely offset the impact of rising oil prices. Recent declines in passenger traffic and flight cancellations have been limited, with load factors remaining high. Investors are advised to monitor pre-sales for the upcoming May Day holiday; if current trends persist, the sector may demonstrate better-than-expected ability to pass on oil price pressures.