Shares of China Eastern Airlines Corp tumbled to their daily downward limit Tuesday after 1.406 billion new shares became tradeable.

China Eastern completed its takeover of local rival Shanghai Airlines Co on Jan 28 by issuing a total of 1.695 billion tradeable shares. Among them, 1.406 billion shares entered trading yesterday, and another 288.9 million new shares will become tradeable on June 25, 2012, according to a statement from the carrier.

Shanghai Airlines' shares closed at 7.27 yuan apiece on Jan 11, its last trading day before being delisted. The cost for Shanghai Airlines' shareholders to swap to China Eastern shares was 5.59 yuan per share, according to the 1:1.3 share swap ratio.

"China Eastern closed at 6.31 yuan per share on Monday, leaving a substantial profit margin when new shares became tradeable," said Yao Jun, an analyst at China Merchants Securities.

Therefore, on the first trading day, newly expanded China Eastern saw a selling spree as shareholders rushed to make gains. As a result, the Shanghai-based carrier reached its maximum downward cap of 5.07 percent to close at 5.99 yuan.

Trading volume expanded significantly yesterday, hitting 412.42 million yuan, and exceeded the total volume over the past six days at 348.50 million yuan.

Li Lei, an analyst at CITIC China Securities, told China Daily that after the new share launch, share prices would undergo an adjustment period since both of the companies' shares were previously overvalued.

But in the long run China Eastern's performance should live up to market expectations and enjoy a temporary shot in the arm from this year's World Expo and new market share in Shanghai, Li added.

China Eastern and Shanghai Airlines embarked on a merger in June 2009. The merger is expected to enhance China Eastern's brand image and consolidate its business performance, said Zhang Xun, an analyst with Dongxing Securities.

The injection of Shanghai Airlines assets has expanded China Eastern's fleet size from 243 to 310, outnumbering Air China to become the second largest carrier behind China Southern Airlines. Furthermore, the merger also expanded China Eastern's Shanghai market share from 31.1 percent to 46.6 percent, as calculated by passenger flow.

In addition, the forthcoming Shanghai World Expo and the related construction boom as Shanghai develops itself into an international shipping center, will also bolster China Eastern's performance, added Zhang.

The six-month-long Shanghai World Expo is expected to bring 70 million visitors to the nation's financial hub, and is estimated to bring 6.125 million more passengers to the city, said Zhang. China Eastern is foreseen as a major beneficiary of the Expo.