Shares in China Southern Airlines and China Eastern Airlines, surged yesterday on hopes of accelerating cross-strait ties and renewed rumours that a relaxation of foreign ownership limits was imminent.
Analysts said that the rumours gained impetus from yesterday's signing of a deal for Taiwanese carrier China Airlines to take a 25 per cent stake in China Eastern's air-cargo subsidiary, China Cargo.
Shanghai-based China Eastern rose nearly 10 per cent, to HK$1.03 a share, while China Southern, the mainland's largest domestic carrier, saw its shares rise 4.88 per cent to HK$2.15 each.
The China Airlines deal if successfully concluded, could be a watershed in tearing down political and economic barriers between Taiwan and the mainland, especially in the wake of last week's announcement by President Chen Shui-bian that Taiwan would seek to end the ban on cross-strait links.
It would also be a logical precursor to direct cross-strait services.
Investors pointed to the deal as evidence Beijing's taste for foreign ownership was expanding, as airlines faced a need for capital in the process of merging into three mega-carriers.