China Inc has been on an aggressive shopping spree in Hong Kong.
State-owned and private players have snapped up everything from the Tung' family's Orient Overseas International shipping empire to the traditional voice of the local establishment, the South China Morning Post.
Most recently was the eyebrow-raising deal for The Center, a 73-storey downtown skyscraper previously owned by Asia's richest man, Li Ka-shing. A Chinese group paid CK Asset Holdings a hefty HK$40.2 billion ($5.15 billion) for The Center International, the holding company for most of the floors in the building.
To add intrigue to the deal – the most expensive ever for a building – a report in the Wall Street Journal revealed the buyer had unusually direct ties to the Communist Party.
This frantic buying spree, which came as Hong Kong's traditional tycoons sought to unlock value from interests in their hometown, raised the question: Will any of Hong Kong's Crown Jewels escape the clutches of Chinese buyers?
An answer, of sorts, came on Monday morning – and it's perhaps not the one investors were expecting.
Cathay looked ripe for a buyout, most likely from Air China, with which it has a cross-shareholding structure – Air China owns 30% of Cathay, Cathay 18% of Air China.
Hong Kong's flag carrier in March announced its first annual loss since the financial crisis as poor fuel-hedging bets continued to bite. That sparked a bout of soul-searching for Cathay and its main shareholder, Swire Pacific, leading to a change of chief executive and the launch of a "transformation plan" that has seen hundreds of jobs cut.
The airline still ranks consistently among the world's best, but perhaps doesn't glitter like it once did. It's faced constant disputes with staff (the threat of industrial action at Christmas is becoming a Hong Kong tradition), criticism over the tightening up of perks for its membership programme and questions about its business model in an age when more and more Chinese cities are getting direct flights to international destinations. Closer to home, Hong Kong Airlines, part of China's mysterious, acquisitive HNA Group, is also broadening its horizons with routes to destinations like San Francisco.
For Air China, the opportunity seemed clear – a premium name that, while it's become something of a punchbag for a certain segment of Hong Kong society (much like the aforementioned SCMP), retains a certain cache in international circles. And it's not just the name that retains value – Cathay dominates slots at Hong Kong's jam-packed airport, which remains a major aviation hub.
However, it wasn't just China that could see Cathay's potential. Announcing the purchase of its stake, Qatar Airways CEO Akbar Al Baker hailed Cathay as "one of the strongest airlines in the world, respected throughout the industry and with massive potential for the future". It continues Qatar's policy of taking stakes in other international airlines and, perhaps crucially, defends the oneworld airline alliance, of which Qatar and Cathay are members – while Air China sits in the rival Star Alliance programme. And that's before thinking about how a Cathay with state resources behind it might have shaken up the rivalry dynamic with the Gulf's state-owned airlines.
To be sure, the Qatari state has its own problems, not least its political isolation from many of its Gulf neighbours. What's more, the tiny kingdom is very much in the sights of China's ambitious Belt and Road programme.
But for now, at least, it seems no amount of Chinese money will deliver it the Cathay Pacific prize. Investors seem to think so too – Cathay shares slumped in Monday morning trading.