Top Biz News

SOEs may invest in future transactions

(Xinhua)
Updated: 2006-10-08 16:24

State-owned enterprises (SOEs) can make use of financial derivatives offered by the newly established China Financial Futures Exchange to preserve state assets and dodge market risks, a senior official said lately.

"It wouldn't be a problem if SOEs conducted hedge trading at the exchange," said Shao Ning, vice minister of the State-owned Assets Supervision and Administration Commission.

This indicates the Chinese government will loosen its restrictions and give at least large and medium-sized SOEs a chance to try futures trading, said experts.

Regulations on investment in financial derivatives have long been shelved because such financial speculation was regarded as "special and complex".

Air China, the only Chinese airlines making profits over the first half year, might have facilitated the change.

According to its mid-year report, the company earned 102 million yuan in net profit mainly because it earlier hedged the cost of aviation fuel. About 69 percent of its total net profit was the result of hedging an aviation fuel order that protected it from rising fuel prices.

President Wang Zhen of the Management of Business Administration Institute of the China Petroleum University said that China should not be conservative about futures. "The key is to keep the internal risks under control," he said.

China Financial Futures Exchange, the country's fourth futures exchange focusing on financial derivatives trade, was inaugurated on Sept. 8 in Shanghai and is expected to start trading in mainland stock index futures. Enditem