CAO Events by fdjerue7eeu


									CAO Events
CAO of the whole incident
Second half of 2003: The company began trading oil options (option), initially
involving 200 barrels of oil, China Aviation Oil to profit in the transaction.
First quarter of 2004: oil prices led to the company 5.8 million U.S. dollars hidden
losses, the company decided to delay delivery of the contract, expect gas prices fall
again; trading volume also increased.
The second quarter of 2004: With the price of oil continues to rise, the
company's book losses to 3,000 million dollars. Company therefore
decided to defer further in 2005 and 2006 before delivery; trading volume increased
October 2004: another record high oil prices, the company now trading Handicap over
5200 barrels of oil; carrying amount of the loss of another significant increase.
October 10: Faced with serious cash flow problems of the CAO, the first time to the
parent company reported a loss transaction and carrying. In order to make up the
additional margin added dealers, the company has run out of nearly 26 million U.S.
dollars of working capital, 120 million U.S. dollars syndicated loan and 68 million
yuan accounts receivable financing. Carrying amount of the loss of up to 180 million
U.S. dollars, another 80 million U.S. dollars has been paid an additional margin.
20 October: 15% of the parent company's shares ahead of the placing will
be 108 million dollars from loans to China Aviation Oil.
October 26 and 28: the company can not make up for some of the contract plus the
margin Erzao corner events, actual loss suffered by 132 million U.S. dollars.
November 8 to 25: the company's derivatives contracts to have been
squeezed, as the actual loss amounted to 25 381 million U.S. dollars.
December 1, after the loss of 550 million U.S. dollars, China Aviation Oil announced
that it filed for bankruptcy court protection order.
Management should reflect on a derivatives market to speed up the cultivation?
Modern market derivative market instruments, like the various high-tech modern
warfare weapons, you do not, do not know, they do not, once the fighting will suffer
defeat. Market economy do not understand the market, you will inadvertently give
money to the competitors in a lot a lot. Is not it? For example, in recent years, soybean,
cotton, copper, crude oil prices low at the time ... ... we do not use the futures market
orders, but the high price when a large number of procurement, the result is the
product value has shrunk sharply because of price declines, suffered heavy losses.
"CAO incident" occurred, the management of the times should
speed up the cultivation of the derivatives market? The people should educate
themselves, entrepreneurs and managers to help them understand the global
derivatives market instruments, market competition indispensable tool? This should
not have government, business and individual investors understand the risks and how
to face the risks?
More than ten years in the futures market practice, I see too much emphasis on
China's management of the local market during the incident, but did not
pay attention to the market function will play the enormous economic benefits
countries. For example, the 500 billion U.S. dollars foreign exchange reserves,
assuming full holding dollars when the dollar depreciated by 20%, the
exchange's real value will shrink 100 billion U.S. dollars, suffered heavy
losses; If you hold 250 billion U.S. dollars, held 250 billion euros, foreign currency
assets the actual value will not be reduced to avoid exchange rate risk. Use of
derivative market instruments, hedging against foreign exchange reserve management
is only a microcosm. If the entire national economy in market competition, universal
access and play to the function and role of derivative markets, the prosperity of the
country will make an invaluable contribution. In a sense, the market economy is the
price of the economy, market economy, the market price of a unified scientific theory
and practice, there is no strong theoretical basis, no long-term market practice and
experience is to become the market can not master, no master adjuvant market
professionals, entrepreneurs in the market is not hard to go wrong.
Departments and industry leaders from the high national interests, to develop markets
and market practice, study, training and found their own expert-level personnel, the
establishment of national market research team of experts for the country, provide
valuable business information and asset prices management strategy.
Some netizens said that "events are derivatives CAO Blame." I
worry most is that in this "unworthy" to reflect the views of
"China         Aviation      Oil     incident."      "CAO
incident" just shows that the Chinese derivatives market development and
personnel training imperative. (The author must Tan City)
Second, there is a strategic choice reflect chilling
Recalling the large state-owned enterprise reform and development process can be
described as "quite upset, and create a precedent." They had
seen so much of the difficulties and obstacles, in turn face the weird variables, the
future of business, the key may lie in the "helpless" to
"orderly", that is, the development of enterprises to control their
own pace, rather than reduced for the "development" of slavery.
As an enterprise, "the realm of freedom" may be forever
impossible dream! However, rhythm control their own development, its practical
significance may be far greater than the philosophical sense! Looking through a
number of strategic business planning, sensitive people may shudder: The length of
the competitive strategy, understatement of the risk strategy (or even no risk strategy),
as to a car equipped with high-power engine, but no matching brake installation
system. The competitive environment in dangerous driving, the lack of enterprise risk
strategy but also how far exactly? In this sense, the risk strategy may be the enterprise
from "inevitable" to "free" close to an
important tool.
An important factor contributing to business risk, one may come from business
leaders. "Know only" for the people is a virtue, for business
means steady. In our view, difficult for enterprises to rely on individual people,
"know only the" ability "to know only", it
needs to rely on a standardized system of "knowing only." It has
been observed that, GE and many large enterprises in China, a significant difference
may be in its normative, that things are based on the lack of basis to do would
"stop." Most of us, not the "first awareness, then
join" a business, always with the interests of this or that motive. In
particular, individual motives, were to become the core driving motive, and beyond
the limits of corporate power, enterprises may die out. Only know how to stop people
who know how to speed up.
The second contributing factor enterprise risk may come from team managers.
Fei's "Rural China", hit our weak point. Here the
"soil", not just rustic, mainly "son of soil
around" complex. In business, the performance of the organization as
managers deviate from value-oriented, not into the city of Chung Chi, each have their
own calculations. Corporate decision-making or policy by the various
"forces" the impact of variable values change. Corporate
mission can not have a "soul" of the approved enterprise
managers more, might be only a group of mob. Fathers used to say "Happy
is he who has faith," and extended the, team managers a common corporate
values, is lucky.
Chinese enterprises need to have industry perspective, there are capital operation
ability and strategic perspective of entrepreneurship, innovation also requires
managers with the execution team. These are not holding the fate of companies and
betting. (Author Ma Zhengyang)
Three senior traders reflect market behavior
State has approved only 26 enterprises in overseas futures hedging operations, but in
China there is a need for businesses and individuals are at least 260, 2600, these
enterprises or individuals are law-firm away from foreign futures out? The answer is
clearly no. Not long ago, part of the financial media have been exaggerating
"China          cross-border       arbitrage       copper     plate      tragic
'decapitation'"              news,      we   exposed      these
"underwater iceberg." According to my understanding, many of
the industry the main points of the text of a negative attitude. However, the mentioned
large numbers of Chinese cross-border arbitrage is indeed an indisputable fact, which
the Chinese arbitrageurs obviously does not mean that 26 enterprises.
"Ostrich-type" policies not meet the current needs is said, met a
strong enemy attack in the ostrich, it will go to the dunes in front of its head deeply
buried in the sand, thinking that it would survive an enemy attack. Our policy on
foreign futures exchanges, like, like an ostrich.
Currently, the market demand for overseas futures business rising, to join overseas
futures businesses and individuals growing; the country's relevant
management policy remains unchanged.
In this, the author of the current policy itself and the implementation of results to
make a few questions.
One question on the "speculation" of misunderstanding.
"Speculation" in the Chinese language is a derogatory term, but
"speculation"           and     a      neutral     term      for      the
"investment",                 the            Chinese             current
"investment" approach has been very accepting and tolerant.
Stock, sports lottery, real estate investment has been gaining in popularity. Futures
investment (or "speculative"), and not essentially different from
other investments, but said that foreign futures investment, I am afraid that most
industry professionals have to admit, some British and American futures exchange in
terms of transaction size, the system construction supervision of water to the market
average over the futures market in China. Our laws and regulations on overseas
futures business to segment: the hedging business to accept a certain degree of
speculative trading firm rejection, this is a political not a scientific attitude.
Understand the principles of the futures market are aware, the futures market in the
"speculative" and "hedge" like the palm
and back of the hand, is an organic whole, two aspects essential, the lack of which, the
market can not sustain. If a company's board of directors reached a
resolution calling for management in the futures market can only limit the size of the
hedge transactions, not for speculation is understandable; and regulations stipulated
by the State enterprise or individual can only be carried out in the futures market
"hedge", not "speculation", I thought it
was quite absurd.
National policy on "speculative transactions" of such
"discrimination", in fact, imply that the risk of speculative
trading foreign futures too. The discrimination suit and mislead the understanding that
the futures market and the limited number of community media, to make speculative
transactions       on     foreign       futures      have       some       degree        of
"demonizing" the judge. This is, in some media reports on the
title to see, such as "are to blame financial speculation," and so
on. And scientific look at this issue, the conclusion is; speculation is not terrible, just
terrible excessive speculation; China Aviation Oil incident was not lost on the
"speculation", but lost in the "excessive
speculation." Any foreign futures speculation business participants if the
actual circumstances and according to their affordability to develop an appropriate
investment plan, and strictly enforced, the risk would not operate Bi choose another
larger project.
The second question, the availability of operational rules, whether in practice a
serious operation? Earlier mentioned, the existing regulations on the management of
overseas futures trading is very strict, not only strictly prohibited outside the futures
brokerage business, is to prohibit any business (26 outside) and individuals involved
in foreign futures investment. Such stringent requirements not difficult to implement
in practice. "Ordinance" Article 69 stipulates that "(a
violation of the Ordinance) and its member futures exchange, futures brokers and
their customers, futures practitioners, delivery warehouse administrative penalty, the
decision by the China Securities Regulatory Commission; of other units or individuals
administrative penalty, the decision by the relevant departments in accordance with
legal powers. "in accordance with the above provisions, if an ordinary
Chinese citizens to use their own legitimate assets, as a customer, directly or
indirectly involved in the overseas futures trading is a violation of the"
regulations ", which department should be to do so? Total Buzhi Yu is the
police station or the neighborhood bar street! Not long ago, authorities announced that
will allow our citizens to the legal transfer of property abroad, if the assets can go
abroad, how to use after leaving the country, how can we restrict got it?
"State-owned enterprises business management approach overseas futures
hedging" on overseas futures business permit to receive the state-owned
enterprise established stringent regulations, the enterprise business process, a large
number of the China Securities Regulatory Commission for approval, audit, filing
work. According to my understanding, to handle the work of the China Securities
Regulatory Commission Ministry of Overseas Business Department futures up only
two to three staff members, really worrying, can handle it such a heavy workload.
This also explains why so far only 26 companies received the overseas futures
business license, imagine, if the countries have ratified the 2600 enterprises engaged
in overseas futures, then the size of overseas business office does need to expand the
times? Then the government's specific business enterprise, whether there is
need for such a micromanager? Does this super-strict management will certainly be
able to defense the whole problem? The answer is no! CAO case is a typical example.
The leading events company China Aviation Oil Singapore, although the majority of
shares of state-owned assets, it is registered in Singapore listed companies. Our rules
and regulations governing the object can only be in China's enterprises and
individuals, Chen Jiulin without the Singapore futures operations plan report to the
CSRC, and need to accept the transaction process supervision and guidance of
relevant state departments. SASAC head of criticism can only come up with the
company's board of directors of "Risk Management
Manual" and accused the management of the company's
operating license beyond. We are tough, strict management policies of foreign futures
face a total breakdown of the CAO event. More that government management will
never "do" instead of the specific business enterprise, and
improving their operations and risk control is the key to the problem. This despite the
reality, was rigorous, no accommodation outside the futures-style ostrich policy,
benefit is that when a problem in practice, can be loud reprimand: countries have
banned, why do you still abiding by the law! Managers, of course there is no
responsibility! But the problems brought about is that It does not solve social
problems that occur in practice; will bring to the policy action in the implementation
of those embarrassing: difficult to put a lot of violators are arrested, punished
according to law, had also put his head buried inside the sand, do not ask disregard;
more serious, such regulations and policies to protect national economic order, escort
for social development? Foreign futures investment controls should be relaxed recent
CAO event, a huge shock to all, to the author's view, the reason only two
points: First, Chen Jiulin does not have the professional capability of the futures
market investments, but opinionated excessive speculation, eventually leading to
defeat; Second, China Aviation Oil Singapore ineffective internal control systems,
power managers lack effective control, internal management of major shortcomings.
However, the CAO event also gives us two important revelation: First, the process of
economic integration with the world, the international futures market is getting closer
and closer to us, can not be avoided, can only meet the challenge; Second, to
participate in international market competition, we must make full preparations to
improve their professional competence. At present, China's futures market
has become an important part of the national economy, management of the futures
market, futures talent pool, the community's understanding of the futures
markets are all quite different ten years ago, with the opening up overseas futures
business conditions. I think that, at this stage futures policy adjustments, should be
open to enterprises, individuals outside the futures business constraints, while outside
the futures brokerage business through the establishment of licensing system,
strengthen management of foreign futures brokerage business, mandatory for brokers
to enhance investment by business risk education, training, business rules, and
business information gathering, etc. In China, many times in recent years to rectify the
futures market has been on the futures brokerage business, has accumulated abundant
experience, absolutely can learn from.
Many people, including policy makers have good intentions: China's
enterprises and citizens worried about themselves alone Libo, competition in the
international futures market suffer, fall. However, the CAO event once again showed
that a long time, in our policy are cultivated under the protection of the weak seedling
greenhouse, certainly in the cruel competition of market economy was the first out.
China to develop market economy, no longer follow the old path of closed-door policy,
we need a policy is to provide a more relaxed business environment for the survival,
protection and fair opportunity to compete, train the company's viability.
Recently, a major event occurred in the economic field, Lenovo acquired
IBM's personal computer division to become a truly international company.
All interested people are in China for the Lenovo pinching a sweat, worried that
Lenovo may encounter various risks. Only the Chinese people going abroad, learn and
skillfully use the international rules of the game, can really stand in the forest of the
world's enterprises can not pay CAO incident white "expensive
tuition fees."

To top