AirAsia shares slump

For now, there's no particular reason to buy into airlines, says OSK Research, which has a 'neutral' rating on the stock

AIRASIA Bhd, Southeast Asia's biggest discount carrier, tumbled the most in almost a month amid speculation investors are cutting their holdings on concern rising crude oil prices will erode earnings.

The stock slid 4.5 sen, or 5.2 per cent, to 86.5 sen, the most since May 27, the biggest decliner on the benchmark Composite Index..

Some investors have already reduced their stakes in AirAsia and other airlines. T. Rowe Price Associates Inc said last week it sold 14.5 million shares in the carrier, trimming its holding to 6.2 per cent.

"For now, there's no particular reason to buy into airlines," said Chris Eng, an analyst at OSK Research Sdn Bhd, who has a "neutral" rating on the stock.

AirAsia chief executive officer Datuk Tony Fernandes said last week profitability will be hurt after jet fuel doubled in the past year and a weaker ringgit in the past few months raised its US dollar debt repayments.

Crude oil rebounded from the lowest in a week, climbing 2 per cent to US$134.62 in New York on June 20 and recently traded at US$135.85.

AirAsia has slumped 49 per cent this year, faster than the Composite Index's 18 per cent slide. Malaysian Airline System Bhd, the national carrier, dropped 14 sen, or 4.2 per cent, to RM3.20, headed for the biggest decline since June 4. - Bloomberg