SINGAPORE: Singapore Airlines' share price rose as much as 21 per cent during intraday trading to a five-month high on Tuesday (Nov 10), as markets rallied on news that a vaccine candidate was 90 per cent effective in treating COVID-19 patients, fuelling hopes for a return to normal.
SIA's share price rose to a high of S$4.15, before closing up 14 per cent at S$3.91. This is the first time since June that SIA's share price has risen above S$4 .
On Monday, US drugmaker Pfizer said its experimental COVID-19 vaccine was more than 90 per cent effective, a major victory in the fight against a pandemic that has killed more than a million people and battered economies.
Airline shares in Asia jumped in hopes that people may be able to travel again, with Japan Airlines increasing by more than 20 per cent and Cathay Pacific by 14 per cent.
READ: SIA Group reports first half net loss of S$3.5 billion as passenger numbers fall by 98.9% amid COVID-19
In Asia, the Singapore Straits Times Index rose 3.67 per cent, while Hong Kong's Hang Seng Index increased 1.1 per cent. Mumbai and Jakarta rose more than 1 per cent, while Tokyo and Sydney also posted healthy gains.
Manila rocketed more than 5 per cent, with traders also welcoming signs the Philippine economy is improving despite a third straight quarter of contraction.
Seoul and Wellington were also up, although Shanghai and Taipei fell.
Daily FX strategist Margaret Yang said overall sentiment in the Singapore market on Tuesday was "invigorated" by the vaccine hopes, with daily turnover on the Singapore Exchange more than double the usual.
AIRLINE SHARES JUMPED IN WAKE OF 'VACCINE OPTIMISM'
Ms Yang said airlines shares jumped in wake of "vaccine optimism", which raised hope for a faster pace of normalisation in business activity, travel and tourism.
"SIA’s share price was weighed on by another major pandemic wave in the EU and the US in the past few months. A breakthrough in vaccine development painted a silver lining for the aviation industry," she said.
SIA's share price has been battered since the COVID-19 outbreak early this year, with border restrictions in Singapore and around the world severely curbing travel.
Last week, SIA Group reported a first-half net loss of S$3.5 billion, saying passenger traffic had fallen by 98.9 per cent.
SIA has grounded most of its fleet and cut 4,300 jobs, or about 20 per cent of its staff.
The airline has secured S$11.3 billion in fresh liquidity in the last six months, including the S$8.8 billion raised through the rights issue and a further S$2 billion secured through long-term loans secured on some of its aircraft.
New committed lines of credit and a short-term unsecured loan also provided further liquidity amounting to about S$500 million.
While SIA has suffered huge losses due to a sharp decline in passenger numbers and impairments charges on older aircraft, the group has seen strong cargo demand from areas such as pharmaceuticals, perishables, and e-commerce.
The airline has also taken steps to capitalise on this demand by removing seats in some of its passenger aircraft in order to transport more cargo.
READ: Singapore Airlines confident of having 'very strong liquidity' as it explores new sources of funds to tide through COVID-19: CEO
READ: COVID-19: Singapore to lift border restrictions for visitors from mainland China and Australia's Victoria state from Nov 6
The group has said that recovery from the COVID-19 pandemic is “likely to remain patchy” given the new waves of infection around the world and concerns about imported cases into countries.
Nevertheless, optimism is slowly beginning to return as countries begin gradually allowing travellers to visit.
Singapore has also begun to ease some border restrictions, with the latest being visitors from mainland China and Australia’s Victoria state allowed into the country from last week.
Last month, Singapore and Hong Kong also reached in-principle agreement to establish a bilateral air travel bubble, which will exempt travellers from quarantines or stay-home notice. Those travelling under the bubble will also have no restrictions on their travel purpose and will not need to have a controlled itinerary.
READ: The Big Read: Floored by COVID-19, can SIA soar again? Fate of Singapore’s aviation hub rests on it
IG senior market strategist Ms Pan Jingyi said investor sentiment and stock prices may remain buoyed in the short-term.
"If the path remains a positive one, the bringing forward of the reopening timeline globally would only further accelerate the recovery for SIA towards pre-pandemic levels," said Ms Pan.
Meanwhile, the optimism surrounding the vaccine may provide near-term support for SIA's share prices, but a fragile economic outlook at increasing COVID-19 infections around the world may put its share price at risk of a pull back, said Ms Yang.
"More importantly, it may take a few months before the vaccine is proven successful and becomes publicly available. The manufacturing capacity, storage and transportation of the vaccine are some of the future challenges too," she added.