Who's reaping the windfall?

The impact of falling oil prices reaches many firms. Investors might wonder which listed firms might be profiting most. The following are the sectors and the firms to watch:

Airlines

Airlines, particularly those on the mainland, get big boosts from falling oil prices, as their fuel costs are largely unhedged. Good firms to look at in that regard are Air China, China Eastern and China Southern. Analysts project as much as a 6 per cent share price rise for the airlines for each drop by US$1 in the price of a barrel of oil.

Mainland firms tend to borrow in US dollars, but their income is primarily in yuan. So they have been hurt by the non-appreciation of the yuan this year. The airlines used to be able to book solid gains simply by watching their yuan income appreciate relative to the US dollar, but not this year.

Budget airline Air Asia has enjoyed strong share price gains since the start of last year because of declines in jet fuel prices.

The airline's gains seem mostly related to good marketing and customers' increasing appreciation for cheap tickets. Goldman Sachs research says the Air Asia share price is most sensitive to the carrier's ability to fill its planes, with fuel costs the second most important factor moving its share price. Air Asia has seen its passenger numbers increase by 16 per cent in the first half of this year compared with last year.

Power