Safe enough for Sasac
The State-owned Assets Supervision and Administration Commission is introducing new rules to make executives at state-owned enterprises accountable for losses resulting from poorly conceived derivatives transactions. But there are concerns that many SOEs will now shun legitimate hedges. Georgina Lee reports
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 up
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