One of the reasons the Qatari investment is being seen in poor light is the fact that the Arab nation has been accused by several of its neighbors of allegedly supporting terrorism groups like ISIS and Al-Qaeda, and of destabilizing the Gulf region.
The deal means Qatar Airways will be Cathay Pacific's third largest shareholder next to Swire Pacific Limited (45%) and Air China Limited (29.99%).
Qatar Airways is the Arab state's flag carrier.
Hong Kong's Kingboard Chemical Holdings Co Ltd said it had sold the stake to Qatar Airways for HK$5.16 billion (US$661 million), making the Middle Eastern carrier the third-largest shareholder in Cathay.
It was rebuffed by American Airlines earlier this year. With Cathay Pacific now undergoing hard times as it looks to restructure and streamline, only time will tell if it was a worthy investment by the Gulf Carrier to tap into the Asian market, or merely another airline to add to its repertoire.
Despite Cathay's troubles, Qatar Airways chief executive officer Akbar al-Baker described it as "one of the strongest airlines in the world. with massive potential for the future".
Earnings have also been under pressure as the big three Mideast carriers including Qatar Air grab a bigger share of premium inter-continental routes, pushing Cathay to its worst six-month loss in at least 20 years in the first half and spawning a transformation program featuring thousands of job cuts.
Both companies are members of the Oneworld alliance, as are British Airways, Latam and American, though that didn't stop the US carrier's CEO Doug Parker from opposing the planned Qatari investment in his group.
Behind the Cathay Pacific stake is the battle for better access to China, which is expected to become the world's biggest aviation market within a decade.
Kingboard Chemical said the group, which will cease to hold any Cathay Pacific shares following the transaction, will recognize a gain of about HK$800 million from the sale in its annual results.
In a Hong Kong stock exchange disclosure, Kingboard Chemicals says the group is primarily engaged in the manufacture and sale of products including chemicals, laminates, printed circuit boards, and that the Cathay shares are an investment.
In other Qatar Airways-related news, The Times of India reported that a Qatar Airways Doha-Bali flight was diverted to Chennai after an "intoxicated" Iranian woman used her sleeping husband's thumb to open his mobile phone - and discovered messages that she believed showed he was cheating on her.