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Wan Kok kin asked 2 years ago

How can i know if a company is  fairly hedging its forex risk / commodity risk by using derivative or they just speculate on it.

Wan Kok kin replied 2 years ago

And, when i look at GCB 2017 annual report. Why the number about (gain/loss) on derivative from cash flow statement and PROFIT/(LOSS) BEFORE TAX are so different. For example in 2016, on cash flow statement the derivative loss is RM22.1m while on PROFIT/(LOSS) BEFORE TAX it is gain RM24.7m.

1 Answers
Victor Chng answered 2 years ago

Hi Kok Kin,
1.When it comes to hedging, you will not know the hedging policy until you ask the management, how are they hedging their forex or commodity. 
2.As for the figure regarding different in derivative amount, the amount are supposed to be the same but in this case is different. Sometime, the excess or shortage figure are tally in other place. In this case, I can;t seem to find it too. You may want to email the company and clarify with them.