Low Heat Likely as China Stews On Derivatives Losses
Published at: www.reuters.com
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In China, Neither Side Wants Derivatives Confrontation
September 29, 2009
China Derivatives Fallout likely LimitedA number of reports in late summer said China’s State-owned Assets Supervision and Administration was giving its tacit sanction to Chinese companies to back out of loss-making derivatives positions. However, a recent Reuters story (Sept. 29) suggests that both sides will aim to head off litigation or even arbitration. On the one hand, Chinese authorities recognize that hedging tools are necessary. On the other, the foreign investment banks who were the counterparties to the deals would prefer to avoid a confrontation that might endanger a promising market.
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