Back to the teenage years

Chapter 619 Zhang Yunqi Lost

In June 1999, a major editorial in the People's Daily caused Xiangtai, a stock that had suffered losses for three consecutive years, to experience a rocket-like surge followed by three consecutive days of limit-down.

With such drastic stock price fluctuations, on the morning of June 18th, Xiangtai Pharmaceutical finally issued a temporary suspension announcement, stating the reason as: "Intended disclosure of a major event."

The market instantly erupted in chaos.

This wildly volatile stock has attracted a lot of attention.

In an instant, pager messages, business department broadcasts—all channels were conveying the same message: Xiangtai Pharmaceutical was about to undergo restructuring!

Everything went as Lu Yuanzhou had predicted.

On June 19th, the following day, Xiangtai Pharmaceutical resumed trading, and its stock price immediately soared like a rocket, reaching 33.8 yuan within three minutes. Investors flocked to the stock, and trading volume increased dramatically.

Lu Yuanzhou's ability to reclaim the 40 yuan mark from three days ago seems to be within reach.

So, what about Zhang Yunqi?
The sun shines brightly in the sky, and the summer heat is intense.

The office on the top floor of Huarong Jinhui.

Xu Qingshan sat on the leather sofa, took a couple of sips of the Da Hong Pao tea, and found it a little too hot to drink.

He put down his teacup and glanced at Zhang Yunqi, who was sitting in his office chair busy signing documents. His young employer didn't seem to be in a hurry, even though the two sides had reached the most critical moment.

Of course, the strategies and objectives of both sides are already quite clear.

Zhang Yunqi's approach involves a combination of "stock holding on behalf of others + forward exchange rate agreement," where he borrows stocks through private agreements with underground investors and institutions. However, the average price has now risen to 14 yuan per share.

The risks have reached their peak!
Those underground tycoons were grinning from ear to ear.

Because the stocks Zhang Yunqi borrowed will expire in less than a month, he will need to buy an equivalent amount of stocks to repay them. However, the stock price has now soared to over 30 yuan. To repay the stocks or pay the price difference at this price, he will have to bear a cost of nearly one billion yuan, which is enough to destroy the entire career he has worked hard for for several years!
As for Lu Yuanzhou's side, they also operated with high leverage.

Xu Qingshan knew that Lu Yuanzhou's original plan was to take out loans to accumulate shares, drive up the stock price, and then use the restructuring benefits to sell off his shares, causing the stock price to collapse, and finally complete the low-price acquisition of Xiangtai Pharmaceutical.

Lu Yuanzhou's primary goal was arbitrage, and his secondary goal was to acquire Xiangtai. However, due to the mismatch in timing, he, like Zhang Yunqi, faced enormous pressure from both financial and time costs.

Lu Yuanzhou's main entity controlling Xiangtai was Yongxin Trust.

Yongxin Trust is a licensed financial institution. In such collaborations, the funds provided by Yongxin Trust to Lu Yuanzhou, whether through trust plans, segregated accounts, or private agreements, would inevitably be subject to strict risk control clauses. The most crucial of these is the collateral ratio limit.

What does that mean?

Assuming a stock's market price is 100 yuan, and Yongxin Trust lends Lu Yuanzhou 60 yuan, the initial pledge ratio is 60%. Therefore, the warning line is set at 150%-160% based on this initial pledge ratio. When the stock's market value divided by the loan principal falls below this ratio, Yongxin Trust will inevitably require Lu Yuanzhou to provide additional margin or pledge more shares. The liquidation line is typically 130%-140%. Once this level is breached, the trust must immediately force liquidation, selling the pledged shares to recover the principal and interest, thus avoiding its own losses.

Zhang Yunqi's strategy was sound. Suppressing the stock price would trigger this mechanism, which would then trigger a series of strict risk control and legal mechanisms, leading to the breakdown of the cooperative relationship between Lu Yuanzhou and Yongxin Trust, thus bringing Lu Yuanzhou a catastrophic disaster.

Xu Qingshan had already figured out Lu Yuanzhou's financing structure and contract details through various channels. Lu Yuanzhou's lifeline for liquidation was 30 yuan!
In recent days, Lu Yuanzhou has repeatedly deployed funds to support the stock price when Zhang Yunqi pushed it down to around 30 yuan, which also indirectly confirms this point.

Because if the price falls below this level, it means that even if Lu Yuanzhou sells all the pledged shares, it won't be enough to repay Yongxin Trust's principal. At that point, Yongxin Trust will have no choice but to force liquidation!
On the other hand, if Yongxin Trust directly sells the Xiangtai shares pledged by Lu Yuanzhou on the secondary market, this move will cause a stampede effect, with a massive influx of sell orders, leading to a further plunge in the stock price and creating a vicious cycle.

This perfectly complements Zhang Yunqi's strategy!

As a trust company, Yongxin Trust's primary task is to protect the funds of its trust plan investors, not to protect Lu Yuanzhou. Therefore, after the forced liquidation, Yongxin Trust needs to recover the difference from Lu Yuanzhou. Because the stocks were sold at a low price, Lu Yuanzhou not only lost all his capital but also owes Yongxin Trust a huge amount of principal and unpaid interest. Yongxin Trust will inevitably apply to the court immediately to freeze Lu Yuanzhou's assets and seize other assets to offset the debt.

At this point, Lu Yuanzhou is doomed!

Falling below the liquidation line and triggering forced liquidation has always been the most ruthless rule in the leverage game of the capital market.

It allows Zhang Yunqi to overcome Lu Yuanzhou in terms of capital without having to completely outmaneuver him. Zhang Yunqi only needs to precisely target a certain fulcrum of the stock price to leverage the risk control rules of Yongxin Trust, Lu Yuanzhou's partner, and cause the collapse of its entire capital chain!

Xu Qingshan's current concern is that the restructuring news of Xiangtai Pharmaceutical has been announced, and market sentiment has clearly improved. It's virtually impossible for them to push the stock price below 30 yuan now. Therefore, his purpose in coming here today is to obtain Zhang Yunqi's next instructions before he can proceed.

Thinking of this, Xu Qingshan saw Wang Guibing walk in from outside, and Wang Guibing placed a document on Zhang Yunqi's desk.

Zhang Yunqi then put down his pen, flipped through the document, and said, "Old Xu, thank you for waiting so long. Now, go ahead and say it."

Xu Qingshan stubbed out his cigarette, sat up straight, and said, "Mr. Zhang, I've confirmed with the channels again. If Xiangtai's stock price falls below 32 yuan, Yongxin Trust will activate its internal warning procedure. If it falls below 30.5 yuan, the forced liquidation order will be sent directly to the trading room."

Zhang Yunqi nodded: "With the early warning system activated, Lu Yuanzhou still has time to maneuver. Only by breaking through 30.5 can he achieve a decisive victory."

Xu Qingshan immediately said, "Theoretically, that's true, but Xiangtai has already announced the restructuring, market sentiment has been ignited, and the funds supporting the market are very determined. With only the remaining shares we have, it will be difficult to achieve this in a short period of time..."

Zhang Yunqi stood up and pushed the document in his hand in front of Xu Qingshan: "With this document, can you do it?"

Xu Qingshan picked up the materials and quickly scanned a few pages. His gaze lingered for a moment on a few lines of numbers and photocopies stamped with a red seal, then he immediately said, "It can be done."

Zhang Yunqi said, "Let's find a reliable channel and push it out."

Xu Qingshan nodded, got up and left.

The following day, the official website of the Economic Information Daily suddenly updated with a headline news article titled "Audit team to be stationed soon! Xiangtai Pharmaceutical suspected of concealing major debts, multiple banks have initiated risk investigations."

The article details the guarantees provided by Xiangtai Pharmaceutical to its affiliated companies, totaling 90 million yuan. It also points out that some debts are overdue for three months, and creditor banks have formally sent collection letters, intending to apply for asset preservation. The bank that sent the collection letter is none other than Lijin Rural Commercial Bank!

It's not surprising that Xiangtai Pharmaceutical has been losing money for years and has debt problems. The truly fatal point of this report lies in the arrival of the audit team at Xiangtai. In the process of restructuring, once an audit team arrives, the second stage of administrative approval is effectively halted. Because no leader dares to risk signing off on a restructuring with existing problems before the audit report is released, coupled with the undeniable debt issues, this means that Xiangtai's restructuring still faces enormous uncertainty, directly offsetting previous positive expectations.

Upon the release of this news, Xiangtai Pharmaceutical's previously soaring stock price collapsed like an avalanche, with sell orders flooding the market and buy orders disappearing instantly. By the end of the day, Xiangtai Pharmaceutical's stock price had plummeted from yesterday's high of 33.8 yuan to close at 31.2 yuan.

The stock price has once again been pushed down to the brink of collapse!

The real life-or-death struggle took place on September 21.

On this day, the two sides engaged in a near-brutal battle of chips.

As Zhang Yunqi's trader, Xu Qingshan still held nearly 200,000 lots of chips. In addition, the market sentiment was very low and the selling pressure was huge, which was in his favor. He was almost certain of victory.

Xu Qingshan used more than a hundred accounts, and the sell orders placed by each account were evenly distributed at each price level from 30.8 yuan to 31.5 yuan, like a fine and tough net, constantly consuming the buying power of the supporting funds and slowly grinding the stock price down.

At the same time, the selling pressure was fueled by market panic.

The negative impact of the Economic Information Daily's report was still strong, and many small and medium-sized retail investors joined the sell-off. On the trading screen, in addition to Xu Qingshan's organized grid-like sell orders, there were also a large number of sell orders from retail investors.

However, accidents still happened.

Xu Qingshan discovered that whenever the stock price touched 30.9 yuan, he felt that the buying power on Lu Yuanzhou's side would suddenly increase, with buy orders of 10,000 or 20,000 lots appearing from time to time, supporting the price, and even occasionally sweeping up the sell orders at several price levels, briefly pushing the stock price back to 31.2 yuan.

For a time, the bulls and bears drew an extremely narrow sawtooth line on the intraday chart, while the trading volume was unusually large! Every price level changed hands repeatedly, with massive amounts of funds constantly pouring in, but a decisive breakthrough could not be formed.

Time ticked by, and by 2 p.m., Xu Qingshan began to feel anxious. The nearly 200,000 lots of stock he had prepared in advance for the final stage of the price suppression were almost gone, but the stock price still couldn't break through the 30 yuan support level.

Of course, he knew that Lu Yuanzhou would definitely organize resistance around 30 yuan. The problem was that his chips were just the fuse; the real sell-off came from the panicked investors.

Logically speaking, under such a multi-pronged attack of "negative news from official media + negative audit results + major shareholders selling off their shares," no single force should be able to withstand it. However, the current reality is that the stock price remains unmoved at around 30.9 yuan!

If it can't break through 30.8 yuan, it can't really threaten the 30.5 yuan liquidation warning line, let alone touch the 30 yuan life-or-death line!
They are going to lose.

No, the defeat is already decided!

Xu Qingshan broke out in a cold sweat upon realizing this.

He couldn't imagine Zhang Yunqi's reaction to this. He didn't even dare call Zhang Yunqi to tell him that their massive ammunition reserves were now exhausted. He simply couldn't understand where things had gone wrong. He didn't believe Yongxin Trust would give Lu Yuanzhou unlimited ammunition, nor did Lu Yuanzhou have that many stocks pledged to Yongxin Trust!

So where exactly does the problem lie?!

Thinking of this, Xu Qingshan suddenly sat up straight in his chair, his face almost touching the screen.

Looking at the transaction details and buy/sell queue charts for different periods, he quickly noticed a detail: the large orders of tens of thousands of shares from several major business departments commonly used by Yongxin Trust always appeared precisely and economically during the gaps when the selling pressure on his side eased slightly, never wasting a single penny on ineffective price increases.

This restrained and precise tray-laying is by no means a desperate defense, but rather the construction of a counter-attack position!

Xu Qingshan's back was sweating.

Without further hesitation, he immediately took out his phone and called Zhang Yunqi.

He didn't even have time for a polite remark: "Mr. Zhang, the market is acting very strangely right now. There's a huge panic selling from many investors, but when the stock price hit around 31 yuan, it held very well. Moreover, the other side's buying support is very methodical; they're strategically wearing us down! They're trying to lure us into a short squeeze! Should I still put my last bit of capital on the line?!"

Zhang Yunqi nodded, but before he could speak, his office door was pushed open from the outside.

Zhang Yunqi looked up and saw Lu Yuanzhou.

This was Lu Yuanzhou's first time in Zhang Yunqi's office.

He was elated, smug, and arrogant, and said to Zhang Yunqi, "Mr. Zhang, you have already lost."

Zhang Yunqi put down his phone, his face showing little emotion: "Did President Lu come here specifically to comfort me, a defeated general?"

Lu Yuanzhou pulled up a chair opposite Zhang Yunqi and sat down, his expression and posture full of aggression: "Do you think I don't know you want to stop me from taking over Xiangtai Pharmaceutical?"

Zhang Yunqi said, "This is obvious."

Lu Yuanzhou laughed, perhaps because he had been suppressing his emotions for too long. His laughter was smug, even a little arrogant: "To tell you the truth, I was the one who told you that the audit team would be stationed at Xiangtai Pharmaceutical on July 1st. I knew you would seize this opportunity. Because if it were me, I would seize this opportunity as well."

"Death to survive?"

“That’s fine, but another word might be more accurate: luring the enemy into a trap!” Lu Yuanzhou said, “I know you can find out Yongxin Trust’s pledge limit, so I’m giving you this opportunity to bet everything on this place.”

Lu Yuanzhou laughed and leaned forward, saying, "President Zhang, no matter what, I have to admit you are indeed bold and intelligent. You staked your entire fortune, raised hundreds of millions of yuan, and used underground banks to hold shares in a 'tractor-like' manner, hoping to thwart my plan to acquire Xiangtai Pharmaceutical and thus cripple my cash flow! This would force me to transfer the remaining 50% of Jinzhao Industrial's shares, allowing me to take complete control of the Qingwu Commercial Pedestrian Street on Huangxing South Road! This strategy is extremely audacious. Most people would have been crushed by you long ago."

Lu Yuanzhou's expression had become extremely arrogant: "The problem is that you're facing me. How many bullets do you have left? You have more than twenty days left to repay the stocks you borrowed. But the stock price is still above 31 yuan, and your short position has a floating loss of nearly 1 billion yuan, right? How are you going to cover this hole? What are you going to use to repay it?! Zhang Yunqi and Liu Mingde's yesterday is your tomorrow!"

At this point, Lu Yuanzhou stood up and directly gave the order to Su Nan behind him: "Immediately sweep away all sell orders above 31 yuan, no matter how many, at all costs. I want the stock price to close above 32.5 yuan today! Push it to 40 yuan within three days!"

After saying that, Lu Yuanzhou put his hands in his pockets and turned to leave Zhang Yunqi's office with the air of a smug victor. However, just as the door opened, he seemed to suddenly remember something, turned his head, looked at the expressionless man sitting in the office chair, and said in an extremely dismissive tone, "Of course, Mr. Zhang can also ask me for help, but I heard that when Liu Mingde asked you for help, he crawled into your office. I'd like to broaden my horizons and appreciate Mr. Zhang's crawling posture. My office is in Room 3 on the 18th floor of Jinzhao. I'll invite Miss Yufei to enjoy it with me then."

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(End of this chapter)