Construction firms China Railway Group and China Railway Construction saw their share prices drop sharply on Wednesday amid fears that massive losses have been incurred on foreign-currency bets, Bloomberg reported. A day earlier, shares in CITIC Pacific slumped after the company admitted to losing US$2 billion in unauthorized one-way bets against the US dollar. Shares in China Railway Group and China Railway Construction fell by 13% and 10% respectively. Both companies are scheduled to report third-quarter earnings on October 30. China Railway Group posted gains of US$54 million from foreign-currency hedging in the first half of the year. Analysts noted that the company was at risk because – like CITIC Pacific – it had invested heavily in Australian dollars. The currency has fallen 30% against the US dollar since July. On Wednesday, Hong Kong’s securities regulator said it was investigating alleged misconduct at CITIC Pacific.
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