Wow…Citic Pacific (0267) loss more than $15 billion HKD on forex forward contract. Well, most company have gone through this road. A lot of U.S. company with overseas business have done this kind of hedging and many have been burned. Some exception, Dell Computer had made a lot of money on this eon years ago and put it as revenue. Hehehehe….
Even country like Malaysia took at $9 billion Rm hit. Pier-1 import is also another example. Took a huge hit, declared chapter 11 and now…limping along.
But the funny thing. Citic Pacific did not even see the sign. The sign is all over their forward contract. They have a term for this…they called is ‘CURRENCY ACCUMULATORS’ = ‘CURRENCY I KILL YOU LATER’. Doesn’t it sound like I KILL YOU LATER?
Whoever coined this term knows exactly what is the end game of the customer. Next time, bring a malaysian along, they read better…ehhehe…’ACCUMULATORS’ my ass…maybe I read it differently…
People…when u in need of buying a forex forward contract and someone in the Bank offered this term…you better run…hehehehe..
I am thinking aloud.
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