State-owned enterprises encounter transnational investment bank financial derivatives trap Deep South Electric Xianzao bankruptcy

Core hints because of the subprime mortgage crisis, once full of dazzling aura of financial derivatives to restore the true nature of speculation. In the context of the global financial crisis, many domestic enterprises are facing a "disaster" caused by investment in financial derivatives.　　The derivatives traps that Western investment banks have concocted in Hong Kong have put their hands on Chinese companies down in turns. 2008 Eastern Airlines, Air China, China Ocean and other enterprises investment losses totaled tens of billions of dollars, SASAC preliminary statistics 23 Central enterprise losses as high as tens of billions of yuan. Among them, the single East Airlines derivative loss of up to 6.2 billion yuan, almost all of its 2008 profit.　　A number of state-owned enterprises exposed financial derivatives hedging huge losses, the SASAC began a comprehensive inventory. Not only enterprises, a part of the domestic "first rich" crowd, but also become the financial derivatives of the "trap" object.　　What is the glamour of financial derivatives that has led many investors to invest huge sums of money and bring huge losses? Mushtaq Kapasi, a newly-graduated Mustak Capas, was sent to Hong Kong to work as a lawyer because he had a degree in mathematics, and a number of financial derivatives experts found him in 2002. Let him translate the products in their hands into English legal texts for external sale.　　Just beginning to understand derivatives, Mustak Capas that these things can help companies reduce risk, they are doing a boundless beneficence thing.　　But more than a year later, a long time to let him understand the design of this thing is so complex and fascinating, is actually a well-designed trap, so that the people do not understand the product of the investors obediently Huang, and then the so-called market rules for their predatory.　　Shen Nan Electric Xianzao bankruptcy deal emergency "brake" among Chinese enterprises investing in financial derivatives, Shenzhen Nanshan Thermal Power Co., Ltd. (hereinafter referred to as "Shennan electricity") is the luckiest.　　In late October 2008, a notice in the Securities and Futures Commission called "Emergency" to suspend the two oil derivatives hedging contracts signed by Shum Nam and a Goldman Sachs subsidiary, saying that it had not properly disclosed the contracts and was not in compliance with the decision-making process and that the contracts were illegal. The SFC's announcement comes as oil prices have fallen below $70 a barrel.　　Under the previous contracts, if oil prices continued to fall, the company would have to start paying huge sums of money to Goldman Sachs.　　It was in March 2008 that J.aron, a commodity-trading company owned by Goldman Sachs, found a contract with them to make a 4.8 million-barrel position "hedging". The power generation company consumes about 6.29 million barrels a year, and after hedging, if international oil prices soar in the future, they can make up for the cost of the oil price by selling "hedging" contracts, which is intended to reduce businessRisk, but in the hands of international investment banks, but play a stimulating gamble. The contract stipulates that, before December 31, 2008, when the international oil price in 63.5 dollars/barrel above, the company monthly to the Shenzhen South pay 300,000 U.S. dollars, when the international oil price is lower than 63.5 U.S. dollars/barrel but above 62 USD/barrel, jerry-run company monthly to the Deep South pay (floating price-62 USD/barrel) x 200,000 dollars.　　But at a time when oil prices are below $62 trillion, Deep South Power will have to pay the company (62 USD/barrel-floating price) x40 million barrels of equal amount of dollars.　　On the day of the signing, the international oil price is 106.81 dollars/barrel, when Jerry's owner ——— Goldman Sachs has thrown out a report that the average crude oil will rise to 141 U.S. dollars/barrel in 2008.　　In this case, the Shenzhen Southern Electric Power in a year, the rapid fall to 62 U.S. dollars/barrels of the possibility is very small, according to this view, the signing should be able to earn no compensation. After the signing of the oil price has been rising, to July or even touch 147.27 dollars/barrel, but since then no longer, by early November 2008, began to fall below 62 dollars/barrel.　　The third section of the contract immediately works, under the contract, if the oil price falls to $50 per barrel, Shum Nam will pay 4.8 million dollars a month to Jerry-run, and drop to $40 a barrel and pay 8.8 million USD per month. The first three quarters of the Deep South power of the total profit was only more than 8 million U.S. dollars.　　The Deep South electricity this only then discovered that oneself already became each other's zu flesh.　　The timely appearance of the SFC, the Guangdong local power generation enterprises in the critical moment to restore the fate of bankruptcy. There are enterprises with large losses of enterprises unscathed Air China, the Eastern Airlines, COSCO and other state-owned enterprises do not have the luck of Deep South power. They have signed multiple options contracts with Goldman Sachs, Credit Suisse and Deutsche Bank to hedge against increased costs of rising fuel prices. But in the game with foreign investment banks have been defeated, 2008 Eastern Airlines, Air China, China Ocean and other central enterprises investment losses amounted to tens of billions of dollars.　　Eastern Airlines, which lost as much as $6.2 billion trillion in derivatives, was almost all of its profits in 2008. This is not the first time foreign investment banks have killed Chinese SOEs.　　As early as the second half of 2003, the Singapore subsidiary of Avic Oil group ——— China Aviation Oil (Singapore) Co., Ltd. was also the Gaoshengje run by sniper Deep South power into the oil call options trap. At the end of the year, the loss of CNOOC's Singapore company soared from $30 million trillion to $550 million, and the parent company had to put up 15% of its shares in advance to raise 108 million dollars for the company, but it was still unable to salvage the fate of its bankruptcy protection.　　Since then, China Minmetals, plant metallurgy, copper storage has also been plunged into the mire of derivatives. However, in addition to Eastern Airlines, Air China, China Ocean and other companies in the "hedging" losses, at the same time, the other 31 foreign futures hedging licences for the state-owned enterprises, in September 2008 international commodity prices continued to collapse after the safe and sound. "HedgingWhether it is an assassin or a protector is a hesitant and difficult one.　　The real role of hedging is to help enterprises to transfer risk, the enterprise through the futures market profit to make up for the spot market losses, or use the spot market profit to make up the futures market position loss, so that the enterprise operation is not affected by the price fluctuation of raw materials and products.　　However, the disclosure data of the two types of enterprises show that the "hedging" of enterprises not lost is mainly in the market of the London Metal Exchange, the Chicago Futures Exchange and other markets, while the loss of corporate transactions is an over-the-counter transaction between firms and investment banks. The most important difference between the market and the OTC market is to choose the OTC trading speculation. The market is a standard contract and is regulated, and over-the-counter transactions are often only a private agreement between the two sides, most state-owned enterprises just take the financial business as a sideline, is unfamiliar with the field of derivative products, the leverage of financial derivatives, Lack of understanding of complexity and risk.　　Once in, they will be held in the initiative by investment banks that are familiar with the rules of the game.　　Last year, for example, an airline with a huge deficit signed a 6-month rollover when it signed a six-month contract with an investment bank, meaning that an investment bank could decide to renew its contract for another six months. Companies that do not understand financial derivatives will think that this clause is irrelevant, but it is not known that a particularly valuable option has been handed over to the other party, since the rollover means that after the expiration of the 6-month contract, if market conditions are unfavourable to the investment bank, the other party has the right to refuse to continue exercising and to favour the investment bank, Investment banks will continue to trade.　　This provision for investment banks is a steady profit, for the enterprise is handhold. In addition, the enterprises in the recruit almost all out of the "hedging" the intention of hedging, and choose to use the Treaty in favor of their own provisions for their own speculative profits.　　Because when they enter into a contract with each investment bank, the company can profit immediately. Citic Pacific, for example, is meant to lock in the cost of buying the Australian dollar, but has purchased a accumulator cumulative Options tool, a tool that the victim calls "I ' Llkillyoulater (kill you After You)" and has no restrictions on risk,　　Citic Pacific has lost 100 million of billions of dollars in contracts with investment banks.　　Citic Pacific's real Australian dollar demand is only 3 billion, but Citic Pacific in the first three weeks of July last year, signed more than 10 contracts, in the Australian dollar fell to their disadvantage, but to buy a maximum of 9 billion Australian dollars, the number of hedging is far more than the actual operating needs of the company. Other enterprises, Hualian three Xin Petrochemical production of PTA (pure terephthalic acid), but also in the futures market to buy, and the real "hedging" direction should be opposite to the spot market, obviously contrary to hedging the original meaning of hedging, while Air China and buy the call option of the right gold hedging, and sold more put options,　　Also speculative. Huangminggao, who served as a consultant in the derivatives crisis of China Aviation Oil (Singapore) Co., warned that hedging companiesThe use of derivatives, do not understand the resolute do not, in particular, derivative options can not be extended. The extension of options is tempting, and it's easy to be fooled when you don't understand. Even if a cap-and-fallback option is to be taken, it must be protected by bidding between investment banks. "For some of the business activities from the hedge to the evolution of vicious speculation, the regulatory authorities can adopt a dog-cutting" way to regulate. That is, in addition to the approval of a certain position, only those who meet the underwriting accounting processing requirements of derivatives. "Investment banks push the terms of complex product transactions into the design of many derivatives, Mustak Capas said that in China, the profit from selling simple and safe derivatives is too meager for foreign banks.　　In order to make a profit, investment banks are making derivative products more complex and riskier.　　Because the simple derivatives market is highly competitive, prices can be found in the open market, and the more complex the structure of the derivative competition less, complex to a certain extent, the right to schedule and options rollover price can not be obtained through the open market, only to allow the exchange to quote, rely on each other's pricing power. For example, some small Chinese companies want to buy hedging products to avoid the risk of interest rate changes, in fact, this through a simple hedging products can do. But foreign investment banks have sold them a complex derivative called the "cost-cutting swaps (costreductionswaps)", a product linked to arcane factors such as euro interest rates.　　When Europe was hit by the credit crunch, these Chinese clients had to pay investment banks millions of of dollars.　　In the setting of the terms of the agreement, foreign investment banks will generally first give the enterprise some sweetness, such as the case of Deep South power, such as the above, signed an agreement, the investment bank will know that the first few months of their own will compensate, so will be used as a threat to enterprises in the risk coverage to For example, when the oil price is 63.5 dollars, when the agreement favours one side of the enterprise, no matter how much the international oil price rises to a fixed 300,000 dollars a month to the enterprise, and the oil price falls below 62 US dollars, the agreement favors the investment bank's side, the investment bank requests according to (62 dollar/barrel-floating price) x 400,000 barrels of conditions for return.　　Eastern Airlines also, when oil prices fell, they paid the investment banks double the price they received from the investment bank when the oil price rose.　　When the world gambled on the appreciation of the renminbi last summer, some Chinese exporters feared that their income from foreign currencies would be devalued, and that some investment banks had introduced products similar to those of oil hedges. The terms require that if the renminbi starts to appreciate after signing, the bank will pay the company, whereas the company pays the bank.　　At this time, the investment banks in the amount of money received by the company on the basis of higher, in exchange for their favorable terms, such as the bank in the transaction damage, you can choose to terminate the contract in advance, and if it is profitable, it will continue to trade, but the company has no right to stop, only Mustak Capas estimates that Chinese companies are still holding hundreds of categories of thisAn unnecessarily complex derivative. Many of these products are linked to markets that may be out of control at any time.　　Chinese derivatives holders may face huge, even unbearable, losses at any time. Aversion to financial derivatives, Mustak Capas has now left the American company he served, but has opened a company that he wants to awaken in his own way from derivatives trading bets and let derivatives return to their original form.