Hong Kong stocks regulator probes into Citic Pacific's losses
22/10/2008 17:05
The Securities and Futures Commission (SFC) of Hong Kong confirmed in Hong
Kong today that the commission has started investigating into the losses of
listed company Citic Pacific Limited.
"The SFC has no further statement to
make at the moment, " said a brief statement issued by SFC published on its
website.
Hong Kong Exchanges and Clearing Limited, the market sole operator,
also said it will follow up the Citic Pacific incident.
Citic Pacific, a Hong
Kong-listed affiliate of China's Citic Group and also component of the benchmark
Hang Seng Index, disclosed on Monday that the board of directors were aware of
the company's exposure to the structured products "accumulator" contracts worth
about 9 billion Australian dollars (6.3 billion U. S. dollars).
The
contracts, used by Citic Pacific as its hedging strategies for the company's
buying of an iron-ore mine in west Australia, require Citic Pacific to buy the
Australian currency at a fixed price of 87 US cents.
The Australian dollar
now trades around 69 US cents after plunging sharply in recent months amid
global financial meltdown, incurring about US$2 billion of losses to Citic
Pacific.
The timing of Citic Pacific's disclosure was under criticism since
the board had already been informed on the losses on Sept. 7, a date more than a
month before the company noted the market.
Citic Pacific continued to fall
9.2 percent to 5.92 HK dollars during today's morning session following its 55
percent dive yesterday.
Dah Chong Hong Holdings Ltd, a listed automobile
dealer and distributor controlled by Citic Pacific, soared 66.67 percent to 1.
45 HK dollars in the morning session after Citic Pacific said it was in talks to
sell all or part of its 56.67 percent stake in Dah Chong Hong.
Citic1616
Holdings, telecommunication service company controlled by Citic Pacific, also
jumped 12.66 percent to 0.89 HK dollar in the hope that Citic Pacific will sell
its stake to cash in for the investment losses.
Xinhua
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