China will work to better manage financial risks associated with the country’s state-owned enterprises (SOEs), according to a central government body, after oil giant Sinopec recently posted heavy losses from its trading arm, Caixin reports.
The State-owned Assets Supervision and Administration Commission (SASAC) said in a statement that it plans to rein in financial investments by SOEs, and that trading of derivatives is done only to hedge risk as opposed to speculation.
Earlier this month Sinopec said that the global plunge in crude oil prices had sparked losses in its trading unit Unipec, which is now investigating its risk management strategy.
Given that Unipec accounts for about 43% of China’s total annual crude imports, the results spooked investors which sent the company’s stock tumbling in Shanghai and Hong Kong.