转自: http://www.bloomberg.com/apps/news?pid=20601087&sid=aiTzMZJJi.vo&refer=home

Citic Pacific Expects $2 Billion in Losses From Currency Bets

By Theresa Tang and Bob Chen

Oct. 21 (Bloomberg) -- Citic Pacific Ltd., the Hong Kong arm of China's biggest state-owned investment company, replaced two finance executives and predicted as much as HK$15.5 billion ($2 billion) in losses from unauthorized currency bets.

A loss of HK$808 million has been incurred from terminating some leveraged currency contracts, and an additional HK$14.7 billion in losses are possible, Hong Kong-listed Citic Pacific said yesterday in a filing. Its parent will provide a standby loan of $1.5 billion, the company said.

Citic Pacific joins companies from Brazil's Sadia SA to France's Groupe Caisse d'Epargne in reporting trading losses as the global credit crisis increases financial-market volatility. The company's bets on the Australian dollar incurred losses as the currency tumbled about 30 percent against its U.S. counterpart from a 25-year high reached in July.

``The incident shows the company has problems in its internal control as it's too big a potential forex loss,'' Kenny Tang, a director of Tung Tai Securities Co., said in Hong Kong. ``The company won't get bankrupted because of its state-owned background but the stock may fall at least 10 percent.''

Trading in Citic Pacific shares will resume in Hong Kong today after being suspended yesterday, the company said. The potential loss of as much as HK$15.5 billion represents almost half of Citic Pacific's market value.

Iron-Ore Mine

Citic Pacific bought currency contracts to fund an A$1.6 billion ($1.1 billion) iron ore mine in Australia, it said. Financial Director Leslie Chang and Financial Controller Chau Chi Yin were replaced, the company said. Vernon Francis Moore has been appointed as finance director.

``These contracts were done without proper authorization and the potential maximum exposure under these contracts was not evaluated correctly,'' Citic Pacific Chairman Larry Yung said in a statement yesterday.

Chang failed to follow the company's hedging policy and didn't obtain approval before conducting the transactions, Yung said.

The currency exposure was discovered last month and an investigation by the audit committee indicated ``there was no reason to believe fraud or other illegal activities were involved,'' Yung said.

Other Chinese companies may suffer currency losses from their Australian investments, Dariusz Kowalczyk, chief investment strategist at CFC Seymour Ltd., said in Hong Kong.

Other Companies

``There have been a lot of transactions by Chinese companies, not just banks but mining companies, buying coal and other assets in Australia,'' Kowalczyk said. ``Those assets are worth much less now because the Australian dollar has declined against the Hong Kong dollar and the Chinese renminbi.''

Citic Pacific on Aug. 28 said its first-half profit fell 12 percent to HK$4.38 billion as material costs rose and part-owned Cathay Pacific Airways Ltd. posted a loss. As of end June, the company had net debt of HK$31.2 billion as well as HK$30.2 billion in cash and available committed loan facilities.

Other companies have also taken currency losses. In Brazil, Aracruz Celulose SA, a pulp producer, Sadia SA, a poultry company and Grupo Votorantim, a cement maker, had $2.3 billion in losses on hedges intended to protect earnings from exchange-rate moves.

Citic Pacific's Yung was ranked China's fifth-wealthiest person with $3.7 billion, according to Hurun Inc.

[此贴子已经被作者于2008-10-21 9:57:31编辑过]