Citic Pacific – and other Chinese firms – bet the wrong way on risky foreign exchange instruments. Was fraud involved?
By staff reporters Chen Huiyin and Xu Ke, and intern reporter Wang Duan
The venerable Chinese investment firm Citic Pacific (HKSE: 00267) earned a place in financial history October 20 by reporting the largest loss ever for a blue chip listed on the Hong Kong stock exchange.
But the staggering HK$ 14.7 billion in red ink expected to bleed from leveraged foreign exchange contracts, including an immediately realized HK$ 800 million loss, may have been only the first of many costly debacles among Chinese companies that bet on currency exchange markets.
“The Citic Pacific case is the tip of the iceberg,” said a senior executive who works in a foreign exchange department at a major Hong Kong bank.