8 Sep 2009 12:58

SASAC to investigate state firms' oil derivative deals

Shanghai. September 8. INTERFAX-CHINA - China's State-owned Assets Supervision and Administration Commission (SASAC) will investigate oil derivative deals that some state-owned firms made with overseas financial institutions in the past two years, state media reported on Sept. 8.

If the investigation finds evidence of wrongdoing, SASAC could support the firms' legal efforts to break the contracts, according to China Securities Journal. Some Chinese firms reported heavy losses from oil derivative deals last year, such as Air China, which recorded paper losses of RMB 7.4 billion ($10.84 billion) and China Eastern Airlines, which reported paper losses of RMB 6.2 billion ($907.86 million).

U.S. and European regulations clearly prohibit some kinds of derivative deals, but due to the lack of regulatory intervention and inadequate financial knowledge of participants, many of these derivatives deals are still being sold in the Asian market, including China, the paper said.