Air China's yuan-denominated Class A shares made a weak debut on the Shanghai Stock Exchange Friday on an uncertain earnings outlook for the airline sector because of high fuel prices, The Wall Street Journal reports. But the downside for the Chinese flag carrier's mainland-listed stock is limited, as its price already reflects the earnings outlook, analysts said. Air China's A shares ended unchanged from their initial-public-offering price of 2.80 yuan (35 U.S. cents), weaker than market expectations of a 5%-to-10% rise on the day. Unusually for new listings in China, the stock opened lower than its IPO price, falling to 2.78 yuan. It traded between 2.74 yuan and 2.81 yuan during the day. The performance was in stark contrast to the 50%-to-80% gains other companies have posted on their first day of trading on mainland China's stock market this year. Air China's IPO was one of many large offerings recently, exerting downward pressure on a stock market already depressed amid worries Beijing may take further tightening measures to rein in the economy. The key Shanghai Composite index has fallen 8.5% since hitting its 2006 high on July 11, though it is still up 38% since the start of the year. With oil prices hovering above $70 a barrel, analysts said Air China's earnings outlook remains uncertain. Analysts estimate Air China's first-half earnings-per-share fell sharply to between three fen and five fen from 18 fen a year earlier. Meanwhile, Air China's Hong Kong-listed H shares ended up 0.7% at HK$2.81 (36 U.S. cents). The company listed in Hong Kong in late 2004. Air China raised 4.59 billion yuan (US$575.5 million) from its A-share offering, the size of which it cut by 39% last week to 1.639 billion shares because of weak demand.
