Cathay Pacific Airways has lost its place in the Hong Kong, blue chip, Hang Seng Index. The Hang Seng Index announced earlier Friday that Cathay Pacific Airways would be removed from the index, along with Kunlun Energy.
They will be replaced by Chinese property developer Country Gardens Holdings and smartphone camera lens provider, Sunny Optical Technology Group.
Cathay Pacific shares closed 0.64% in the red, at the end of the Hong Kong trading session Friday.
Hang Seng reviews its 50 constituents every quarter. Changes are made when relevant, based on a number of details. The change will effective from December 4.
Disappointment follows recent investment
The disappointing news that its shares will be dropped from the Hang Seng Index, follows the investment in the airline by Qatar Airways, announced just this week.
The middle east carrier will purchase a 9.6% stake in the Hong Kong-based airline, for £506 million ($662 million). Qatar Airways will become the third largest shareholder in Cathay Pacific. It’s also the first known investment of a middle east airline into the Chinese carrier market.
Swire Pacific is the largest shareholder, holding around 45% of Cathay Pacific shares.
The Qatar Airways investment is significant, as the latest forecast from the International Air Transport Association said China would overtake the US as the biggest airline market by 2022. That’s two years sooner than its previous forecast.
The two new additions to the Hang Seng Index, meanwhile, have been promoted following a strong performance and outlook.
Share values of both Sunny Optical and Country Garden have more than doubled in the past 12 months. By contrast the Hang Seng Index value has grown just 28%.
The Hang Seng Enterprises Index, which is made up of forty companies, will also face a change. China Longyuan Power Group Corporation Ltd, will be removed, replaced by Guangzhou Automobile Group.