Time to capitalize on cheap crude

Oil prices extended their recent downswing to fall below $60 per barrel at the end of last week. The collapse in the global crude market is a boon for China, which should take full advantage of this rare drop in energy prices to facilitate its own economic transformation and break through long-standing bottlenecks in its development.

Given China's heavy dependence on petroleum resources, fluctuations in international crude prices could accelerate the yuan's internationalization, transform State-owned enterprises and buoy local equity markets. For energy-intensive sectors, price plunges could result in significant costs savings. China should stock up on low-priced crude to support oil-consuming enterprises and enhance its pricing power at the same time.

Falling oil prices can further alleviate the pressure caused by imported inflation, raising expectations of an interest rate cut which could offer additional support to mainland stocks.

Industries sensitive to oil costs - such as airlines and shipping companies - can also directly benefit from lower operating expenses.