Shares of CITIC Pacific saw a slight rebound to HK$5 yesterday on the back of a 70 percent slump following the company's delayed disclosure of a HK$15.5 billion loss from currency trading.

CITIC Pacific's shares rebounded 14 percent at one point in the early session, but profit taking dropped the shares back down, putting the day's gain at just 1.83 percent.

"It was a technical correction because the shares had been significantly oversold. The outlook of the company is still very uncertain," said Patrick Yiu, an associate director of CASH Asset Management.

A CITIC Pacific spokesperson brushed off a rumor that the company's chairman, Larry Yung, has presented his offer to resign to the firm's Beijing-based parent, CITIC Group, because of negligence in corporate governance.

CITIC Pacific Managing Director Henry Fan has announced that he is suspending his involvement in his outside posts, pending an investigation by the Hong Kong Securities and Futures Commission (SFC), to avoid conflicts of interest.

He added that he will step down if the investigation shows that his personal integrity has been tainted, but he refused to comment on whether any misleading was involved in the incident.

On Oct 21, Yung purchased 1 million shares of CITIC Pacific, raising his stake in the company to 19.17 percent. And CITIC Group, China's largest State-owned investment company, bought 2 million shares to lift its stake to 29.44 percent.

Shareholder activist David Webb opposed the privatizing of CITIC Pacific, saying it should let the market determine the corporation's fate.

Liu Pak-wai, an economics professor at the Chinese University of Hong Kong, said the CITIC Pacific incident has undermined investor confidence, and he urged the regulator to tighten the disclosure deadlines for such losses.

Ratings firm Moody's Investors Service gave a stable outlook vote to CITIC Pacific's sibling company, CITIC Resources Holdings. Moody's expects CITIC Resources to continue to enjoy substantial support from its majority shareholder, CITIC Group, analysts at the firm said.

"The ratings have been affirmed, and their outlooks remain stable because Moody's does not expect that the potential support provided by CITIC Group to CITIC Resources, if necessary, would decline to the extent that it would affect the latter's credit worthiness," Moody's Renee Lam said.

In rating CITIC Resources, Moody's assessed the stand-alone credit strength of the company, overlaying it with an assessment of its relationship with, and expected level of support from, CITIC Group, which owns 53.5 percent of the resources company.

CITIC Resources, based in Hong Kong, is a natural-resources and energy-investment holding company with interests in aluminum smelting, coal, oil, manganese, and the import and export of commodities. The company serves as the principal natural resources and energy arm of its parent, CITIC Group.

(HK Edition 10/24/2008 page2)