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Citic Pacific shares tumble as forex bet exposure grows
2008-12-03
HONG KONG (AFP) - Shares in Chinese investment firm Citic Pacific fell sharply Wednesday after it said losses from failed foreign exchange bets were larger than previously estimated. Citic Pacific, which is listed in Hong Kong, closed down 7.3 percent at 5.59 Hong Kong dollars, after its shares were suspended on Tuesday. The benchmark Hang Seng Index closed up 1.4 percent. The company's shares have fallen 62 percent since the unauthorised currency bet was revealed. Several senior managers have resigned. Citic Pacific, the mainland's biggest state-owned investment company, said its realised and potential losses from unauthorized foreign exchange contracts had risen to a total of 18.6 billion Hong Kong dollars (2.38 billion US) as of November 26, up from the 16.8 billion it reported last month. The Hong Kong-based conglomerate also said in the statement issued late Tuesday it will pay 9.1 billion dollars to its parent, Citic Group, for taking on liabilities arising from some forex contracts. Last month, Citic Pacific's Beijing-backed parent said it would buy 1.5 billion US dollars of convertible bonds to bail out the firm mired in failed currency bets, which had suffered from a falling Australian dollar. The firm has asked shareholders to approve the deal at an extraordinary general meeting on December 19. The contracts at the centre of the firm's troubles were made when the Australian dollar was rising, with the hope of locking in the price it was to pay for an investment in an Australian iron ore mine. The heavy losses in foreign exchange trades have triggered an investigation into Citic Pacific by Hong Kong's financial watchdog.
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