HONG KONG: Citic Pacific Ltd., the Hong Kong arm of a Chinese government investment firm, said Wednesday it suffered a massive loss last year after making bad currency bets, but maintained its finances were secure.
The company reported 12.7 billion Hong Kong dollars ($1.6 billion) net loss for 2008, compared to a profit of HK$10.8 billion in 2007, the company said in a statement.
Wrongway bets in the currency market were largely to blame, costing the company HK$14.6 billion (US$1.9 billion), according to the statement.
Citic Pacific stunned investors last year when it revealed huge losses from bad bets on leveraged foreign currency contracts, prompting the company to seek a $1.5 billion bailout from its Beijing-based parent company Citic Group.
Chairman Larry Yung expected the impact of the bad currency bets to diminish and said the company would turn a profit this year.
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"We've already put aside provisions from last year for most of the bets, so we think it will be normal profit for us," Yung said at a news conference in Hong Kong.
The vast conglomerate, whose dealings run from airlines to mining and Wal-Mart stores, also said it is "financially secure" following the bailout. However, maturing debt in the next years requires refinancing which will begin shortly, Citic Pacific said in the statement.
The company recommended against a final dividend and directors will not receive bonuses for last year, the statement said.
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