Shares of Kowloon Development plunged by as much as 75.19 per cent during trading yesterday after the company estimated it had lost HK$3.7 billion through equity and derivatives investments. The Hong Kong and Macau developer ended down 41.73 per cent at HK$1.55 after trading resumed from last Friday's suspension. Shares of the company's 59.52 per cent-owned subsidiary Polytec Asset Holdings, which reported HK$1.14 billion in similar losses, dropped 35.71 per cent to 27 HK cents. Kowloon Development and Polytec said their remaining forward contracts had maximum purchase commitments worth HK$856 million and HK$258 million, respectively, suggesting additional losses may be incurred. The companies said they did not hold any other derivative financial instruments and their 'principal business activities will not be affected by the losses'. Their parent company Polytec Holdings International was 'firmly committed to continue its financial support', they said. Kowloon Development and Polytec were among a number of Hong Kong-listed companies burned by derivatives investments. Blue chip Citic Pacific shares have retreated 70 per cent since it revealed on October 20 a HK$15.5 billion loss from unauthorised currency trades. Kowloon Development's unexpected treasury loss suggested it 'may have lost the balance between its core property business and non-core treasury operations', said a report by Goldman Sachs, which lowered its target price to HK$1.75 with a 'sell' investment grade. 'We expect liquidity concerns and further potential treasury losses to be a near-term overhang, and the dent to investors' confidence in terms of risk disclosure and in how management will deal with these issues could have a greater impact than the financial loss itself.' JP Morgan criticised Kowloon Development for failing to disclose details of its securities portfolio and related risks in its first-half earnings announcement on September 24, and only mentioning the exposure in the full report a week later. It expects the developer to report a net loss of HK$3.3 billion this year as a result of its financial and trading losses. The company posted a net profit of HK$1.91 billion last year.