October 21, 2008

55% Fall of CITIC Pacific

One day after the revelation of a potential loss of HK$15 billion, the stock of CITIC Pacific fell 55% in the Hong Kong Stock Exchange. Its market valuation is from HK$30 billion to HK$14 billion only.

CITIC Group owns 29% of the company, which now values HK$4.1 billion. There is only HK$9.9 billion of the value that the parent company does not already own.

Is it advisable for CITIC Group to loan HK$12 billion to its subsidiary as it's planning to do?
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