IAG is shelving its plans to expand in China, delighting investors who had expressed misgivings over the strategy.
The insurer's share price jumped more than six per cent after it announced it has dumped plans to increase its presence in the world's second largest economy.
IAG said it would instead pursue growth opportunities in other Asian markets, Australia and New Zealand.
"The share price reaction speaks volumes for this being exactly what the shareholders want," said optionsXpress market analyst Ben Le Brun.
"They've got their own way and there's an audible sigh of relief. There'll be pats on the back all round, I think, for management."
IAG shares gained 32 cents, or 6.35 per cent, to $5.36.
Thursday's announcement represents a sudden about face by IAG, which has increased its Asian footprint during Mike Wilkins' seven years as chief executive, and said only two months ago that China would remain "a key focus".
That stance was seemingly endorsed last week when Peter Harmer was announced as Mr Wilkins' successor, and said there "won't be any huge change" to IAG's strategy.
IAG has now changed plans after, it says, completing "significant work on assessing the opportunities available" in China.
IAG acknowledged in August a 60 per cent writedown on the value of its investment in regional Chinese motor insurer Bohai Insurance, an announcement that came at the same time it revealed a 41 per cent drop in full year profit to $728 million.
Mr Le Brun said the decision would have been backed by Warren Buffet's Berkshire Hathaway, which this year took a $500 million stake in the insurer, and that investors will be paying even closer attention when IAG next looks like making an acquisition.
"There's plenty of firepower still there to deploy," Mr Le Brun said.
"It's just a case of choosing wisely, which is what shareholders really want."
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