Air Asia Technical Analysis

Air Asia has received a lot of press lately as a company that would have a lot to gain as oil price trades in the 50s.  Personally, I think the stock has a lot going for itself.  The domestic low cost airline is a mature industry with clear and predictable volumes compared to the volatile demand Air Asia X is facing.  If they have an under capacity problem, it shouldn't be that severe and should easily be solved.  Finally, a weakening Ringgit does wonders for the tourist industry and should help contribute to Air Asia's bottom line.

But I do have a caveat.  The airline hardly pays a dividend.  At roughly 1.5% it's not a lot to go on.  So I wouldn't hold my breath on the company.  Airlines are notoriously bad on returns to shareholders.




Technically speaking, two uptrend lines have been violated pretty hard, so there probably will be a lot of resistance.  Maybe I'd prefer a buy lower at RM1.8 a share given the risk profile of this counter.   The price appears to be muddling around at the moment.