Shares in the Chinese government-backed investment firm Citic Pacific (中信泰富) plunged to a 10-year low yesterday after it said an executive had made improper currency bets that could lose the firm up to US$2 billion.
Citic Pacific, which is the Hong Kong-listed arm of the China International Trust and Investment Corp, revealed the possible losses in a statement to the territory’s stock exchange on Monday.
Investors reacted aggressively in yesterday’s trading.
At the end of the morning session shares in the company were trading at HK$7.88 (US$1.02), down 45.7 percent. Earlier it had fallen as low as HK$7.78, its lowest figure since 1998. Shares in the company had been suspended on Monday.
The firm first became aware of the currency exposure on Sept. 7 and had terminated some of the contracts, but the foreign exchange market has since moved against them.
Hong Kong shareholder activist David Webb said there was no reason for the company to take six weeks to warn shareholders that their money was at risk.
“The board should have disclosed what they knew, when they knew it,” he said on his Web site.
“It is mind-boggling that the board could sit on this information for so long,” he wrote.
Webb said that Citic Pacific’s shares had fallen 41.7 percent between the company discovering the problem and the announcement, while the benchmark Hang Seng Index has fallen 23.1 percent in the same period. The currency bets were made by group finance director Leslie Chang (張立憲), who had acted without the proper authorization, the firm’s chairman, Larry Yung (榮智健), said in a statement. He also apologized to shareholders.
Chang and financial controller Chau Chi-yin (周志賢) have resigned since the trade was exposed.
“Needless to say, this is a very unhappy event,” Yung said, adding that the firm, which has interests ranging from infrastructure to aviation, remained in a solid position despite the loss.
The filing to the stock exchange said the company had already incurred losses of HK$808 million in terminating some of its leveraged foreign exchange contracts.
In addition, it said it had further potential losses of HK$14.7 billion from outstanding leveraged forex contracts held in Australian dollars and euros against the US dollar.
The Australian dollar has fallen sharply against the US dollar since early this month and the losses could rise or fall depending on the performance of the greenback.
The company did not say whether it would wind up the trades in the near future.
Citic Pacific said in its parent firm, which has a 29 percent stake, had agreed to provide a standby loan of US$1.5 billion to help it through the crisis.
Taiwan aims to open 18 representative offices and seven Taiwan Tourism Information Centers worldwide by next year to attract international visitors, the Tourism Administration said on Saturday. The agency has so far opened three representative offices abroad this year and would open two more before the end of the year, it said. It has also already opened information centers in Jakarta, Mumbai and Paris, and is to open one in Vancouver next month and in Manila in December, it said. Next year, it would also open offices in Amsterdam, Dubai and Sydney, it added. While the Cabinet did not mention international tourists in its
EYES AT SEA: Many marine enthusiasts have expressed interest in volunteering for coastal patrols, which would help identify stowaways and illegal fishing, the CGA said Six thousand coastal patrol volunteers are to be recruited for 159 inspection offices to enhance the nation’s response to “gray zone” conflicts, Coast Guard Administration (CGA) sources said yesterday. Volunteer teams would be established to increase the resilience of coastal defense systems in the wake of two unlawful entries attempted by Chinese over the past three months, Ocean Affairs Council Minister Kuan Bi-ling (管碧玲) said. A former Chinese navy captain drove a motorboat into the Tamsui River (淡水河) in Taipei on the eve of the Dragon Boat Festival in June, while another Chinese man sailed in a rubber boat into the Houkeng
NEXT LEVEL: The defense ministry confirmed that a video released last month featured personnel piloting new FPV drone systems being developed by the Armaments Bureau Taipei and Washington are pushing for their drone companies to work together to establish a China-free supply chain, the Financial Times reported on Friday. A delegation of high-level executives and US government officials were yesterday to arrive in Taipei to discuss with their Taiwanese counterparts collaboration on drone technology procurement and development, the report said. The executives represent 26 US manufacturers of drone and counter-drone systems, while the officials are from the US Department of Commerce and the US Department of Defense’s Defense Innovation Unit, along with Dev Shenoy, principal director for microelectronics in the Office of the Under Secretary of Defense
‘ANONYMOUS 64’: A national security official said that it is an attempt by China to increase domestic anti-Taiwanese sentiment and inflame cross-strait tensions The Ministry of National Defense’s (MND) Information, Communications and Electronic Force Command (ICEFCOM) yesterday denied accusations by China that it had undermined regional security by carrying out cyberattacks against targets in China, adding instead that Beijing was responsible for raising tensions and undermining regional peace. The Chinese Ministry of State Security on WeChat accused a hacker group called “Anonymous 64” of targeting China, Hong Kong and Macau starting earlier this year through frequent cyberattacks. The group carried out cyberattacks to seize control of Web sites, outdoor electronic billboards and video-on-demand platforms in China, Hong Kong and Macau, it said, adding the hackers’