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Special Report - China: Corporate hedging

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Chinese companies have revealed substantial losses from financial derivatives transactions in the past year. First was the raft of Chinese corporates that had bet on constant maturity swaps range-accrual notes indexed to euro interest rate curves. These notes would have performed had the euro curve steepened last year but instead the curve inverted in June 2008, causing losses of an estimated 300 billion renminbi ($43.8 billion). Then Citic Group's Hong Kong unit, Citic Pacific, took a hit of

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