Hong Kong Airport Chaos Gives Huge Boost to Rivals Across Border

(Bloomberg) -- Disruptions at Hong Kong’s international airport drove big gains in shares of airports just over the mainland border.

Shenzhen Airport Co. soared by the 10% daily limit, while Guangzhou Baiyun International Airport Co. rose 4.5% to a record high. They also rallied Monday, when protests first brought Hong Kong’s airport to a standstill and flights were canceled. Cathay Pacific Airways Ltd., already under pressure from Chinese authorities, extended its decline to close at the lowest since April 2009.

Citic Securities Co. said international airlines may reevaluate Hong Kong’s role as an international hub and the flights they allocate there. That will help Shenzhen establish itself as a hub in the longer run, analysts Liu Zheng and Hu Shimin wrote in a note.

Hong Kong Cancels Departing Flights for Second Day Amid Protests

Meanwhile, ICBC International Research Ltd. analyst Zhao Dongchen rated Cathay a “strong sell” and warned of “irreversible damage” to the airline’s brand. Zhao’s HK$6 price target implies another 37% decline from the carrier’s current level in Hong Kong.

In a notice late Monday, the Civil Aviation Administration of China said it was boosting transport capacity in airports in the Guangdong-Hong Kong-Macau area to support travel between the mainland and Hong Kong.

China Southern Airlines Co. and Air China Ltd. could also benefit, Citic’s Liu and Hu said, as some passengers switch from Hong Kong to Guangzhou and Shenzhen, where they are the biggest carriers in terms of weekly flights. Air China, Cathay’s second-largest shareholder, swung between gains and losses in Hong Kong before closing down 0.2%, while China Southern advanced 0.9%.

Read more on the protests and disruptions here:

• Protesters Swarm Airport’s Departures Hall: Hong Kong Update
• Hong Kong’s Next Crisis May Be Economic as Protest Fallout Grows
• Cathay Resumes Slide as Flight Cancellations Compound Woes
• Hong Kong Billionaire Ends Silence, Asks Protesters to Think
• China Fund Kaifeng Is Long on Hong Kong, Says Unrest Will Ease
• Why Hong Kong’s Still Protesting and Where It May Go: QuickTake

--With assistance from Dong Lyu and Evelyn Yu.

To contact Bloomberg News staff for this story: Will Davies in Hong Kong at wdavies13@bloomberg.net;Amanda Wang in Shanghai at twang234@bloomberg.net

To contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, Will Davies, Young-Sam Cho

©2019 Bloomberg L.P.

With assistance from Bloomberg