Hong Kong’s Flag Carrier and Financial problems

On Tuesday, stocks in the Asia Pacific were mostly higher thanks to investor sentiment. Also, Hong Kong’s government decided to help Cathay Pacific. Moreover, Australia’s S&P/ASX 200 jumped 2.44% to close at 6,144.90. The financial subindex gained 4.84% as shares of the country’s Big Four banks soared on June 9.

Let’s have a look, at the shares of the country’s Big Four banks. For example, shares of Commonwealth Bank of Australia gained 5.05% while Westpac added 5.8%. Also, shares of Australia and New Zealand Banking Group rose 6.22% and the National Bank of Australia advanced 5.08%.

Hong Kong’s Hang Seng index saw gains on the day.

Furthermore, mainland Chinese stocks strengthen their positions as the Shanghai Composite added 0.62% to around 2,956.11. In the meantime, the Shenzhen Component rose 0.611% to about 11,284.24.

In Japan, the Nikkei 225 dropped 0.38% to 23,091.13. The Topix index fell 0.14% to end its trading day at 1,628.43.

South Korea’s Kospi index added 0.21% to close at 2,188.92.

Cathay Pacific and Hong Kong’s government

Last month, Cathay Pacific reported a HK$4.5 billion loss at its airlines, which includes Cathay Dragon, during the January and April period.

On June 9 Cathay Pacific made an announcement. The company will get a HK$ 39 billion ($5 billion) state-backed bailout. Importantly, Hong Kong’s government will take a 6% stake in Cathay and can have two observers on the board.

Furthermore, Cathay Pacific would implement another round of executive pay cuts. It is worth mentioning that, under the deal, Swire’s stake in Cathay will drop from 45% to 42% while Air China’s holding will decline from 30% to 28%.

Last but not least, shares in Cathay Pacific, and major shareholders Swire Pacific and Air China, halted trading on Tuesday ahead of the announcement. The company is willing to take steps to adapt to the new reality.