CITIC shares rise on news of rescue

Shares of battered mainland conglomerate CITIC Pacific rose as much as 17% on Thursday following news that its state-owned parent company would provide a financial rescue package to its Hong Kong-listed arm, the South China Morning Post reported. CITIC Pacific ended the day at HK$6.62 (US$0.85), up 9.24%. The stock has dropped 54.4% since the company warned of up to US$2 billion in potential losses arising from unauthorized currency bets on the Australian dollar. CITIC Pacific’s parent, CITIC Group, agreed to buy US$1.5 billion worth of its convertible bonds and assume a major portion of losses arising from those bad currency bets. Despite the rescue package, several brokerages further cut their price targets on the stock as those bonds will dilute stakes held by minority shareholders.