Shares of Malaysian Airline System Berhad (KLSE:MAS) dropped to their lowest level in nine weeks after Flight MH17 was shot down in eastern Ukraine Thursday, killing all 298 people on board.
Shares of MAS, which operates Malaysia Airlines, fell 13 percent in Friday morning trade in Kuala Lumpur, increasing this year’s drop to 37 percent, Bloomberg reported Friday, adding that the shares of Malaysia Airports Holdings Berhad also tumbled 4.2 percent, while the ringgit weakened 0.4 percent against the U.S. dollar. Malaysia Airlines Flight MH17 was downed over eastern Ukraine on Thursday in an attack, which the Ukrainian government claimed was caused by a missile fired at the plane by pro-Russian rebels. However, both sides have denied having caused the crash.
“This is shocking,” Bloomberg quoted Geoffrey Ng, an adviser for strategic investments at Fortress Capital Asset Management Sdn., as saying. “Investors will want to sell first and get more information later. This will raise concerns about the safety culture of airlines in general.”
Flight MH17's crash in eastern Ukraine affected other Asian companies too in early trading on Friday. Shares of Cathay Pacific Airways Limited (HKG:0293), Asia's biggest international carrier, dropped 1.4 percent in Hong Kong trading, while Air China Ltd.'s stock dropped 1.3 percent, Bloomberg reported.
The MSCI U.S. Broad Market Index of Asia-Pacific shares, excluding Japanese stocks, slipped 0.4 percent while Japan’s Nikkei 225 index dropped 1.3 percent at open, Reuters reported, adding that gold prices too fell on Friday, as investors booked profits after the price of the metal rose 1.5 percent in the previous session, as Flight MH17's crash hurt sentiment.
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This is the second loss of a plane for Malaysia Airlines, after Flight MH370 disappeared in March on a trip from Kuala Lumpur to Beijing, with with 239 people on board. The plane's disappearance triggered a record search involving several countries and international agencies, and has affected the struggling airline's financial performance since.
“Malaysian Air will have a tough road ahead to rebuild its image,” analysts at the Hong Leong Investment Bank Bhd. wrote in a report, obtained by Bloomberg. “Consumer sentiment on its safety record will be deeply affected, which has further hampered its hope to turnaround by 2015.”