Shares of HNA Group subsidiaries rise after government steps in to help manage liquidity
- Shares of Hainan Airlines rise 2.8 per cent, HNA Technology Investments surges 28.9 per cent
- Hainan provincial government, Chinese civil aviation administrator and policy lender China Development Bank form special task force
The listed subsidiaries of HNA Group rose on Monday after the mainland Chinese aviation and tourism conglomerate confirmed the formation of a government task force that would help it manage its liquidity.
On Saturday, the company – whose debt stood at 525.6 billion yuan (US$75 billion) by June 2019 – said representatives from the Hainan provincial government, China’s civil aviation administrator and policy lender China Development Bank had formed the special task force, which would step in and support its operations. It had sought help from the relevant authorities to reduce its liquidity risks, it said.
The announcement ended weeks of speculation that Chinese regulators would take over the management of the embattled conglomerate. In a filing to the Hong Kong stock exchange on Sunday, HNA Technology Investments Holdings, a unit of HNA Group, said its parent firm’s management team remained unchanged after the establishment of the task force.
The shares of Shanghai-listed Hainan Airlines, a key asset, jumped 2.3 per cent to 1.82 yuan on Monday. HNA Technology Investments saw its H shares surge 20 per cent to 54 HK cents. Meanwhile, HNA Technology, another unit of the conglomerate, jumped 5.8 per cent to 3.08 yuan.
“Government support is being viewed as a positive move helping the HNA Group wade through the current turbulence, after its airline assets fell victim to the coronavirus outbreak with dwindling passenger and cargo volumes,” said Ivan Li, money manager at Shanghai-based Loyal Wealth Management. “But the market will still be closely watching whether a major restructuring of the group and Hainan Airlines will take place in future.”
“The creation of a working group to ease HNA’s liquidity issues is credit positive for both financial institutions and aircraft lessors, because it will help support an orderly resolution and restructuring of HNA, in addition to reducing contagion risks,” said Sean Hung, senior analyst at Moody’s Investors Service.