International Law

CITIC Pacific's Great Big Bet (Bath) -- Who Else Is Next? China Railway!

Details have emerged in the CITIC Pacific forex scandal:

Citic Pacific Ltd.'s attempt to manage currency risk means the Chinese steelmaker and property developer has four times more money riding on the Australian dollar than it earned last year.

The unit of China's largest state-owned investment company has contracts committing it to buy as much as A$9.44 billion ($6.3 billion) of the currency, according to an Oct. 20 statement. That's more than quadruple Citic Pacific's market value yesterday and compares with 2007 net income of HK$10.8 billion ($1.4 billion).

More here.

As worldwide currency traders continued to deleverage risky positions -- with greater volatility and uncertainty than ever done before -- we will certainly see many more Chinese currency investments unwind with significant losses to major overseas investment subsidiaries.

What you know, but the Hong Kong subsidiary of China Railway Group has just announced currency trading losses of $278 million.

Full post as published by Asia Business Intelligence on October 23, 2008 (boomark / email).