Starting with a fully invested A-share portfolio to become a capital...

Chapter 256 Speculation Arises Over Dragon and Tiger Seats; Samsung Group Discusses Betting Agreement

Xu Xiang was startled by his own guess and couldn't help but shiver.

If "Mr. J" is indeed using regulatory rules to force China Unicom to calm down, that would be too despicable, and one could even say that he can't afford to play this game.

Those who frequently engage in short-term trading know that hot topics are like a passing fad—they come and go quickly. If you can't capitalize on the peak of market sentiment, the old hot topics will definitely be outmatched by the new ones once new short-term hot topics emerge.

Take the H1N1 flu concept in April and May as an example. At that time, short-term funds not only speculated on companies related to shikimic acid, flu test kits, and preventive vaccines, but also drove up the entire medical sector, perfectly demonstrating what it means for short-term funds to mobilize in droves.

However, as October arrived, even though the H1N1 flu was still raging around the world and the World Health Organization was still issuing warnings from time to time about the mutation and spread of the H1N1 flu virus, the A-share market did not show much reaction.

Why is this happening?

The reason is that the H1N1 flu outbreak was expected in April and May.

Moreover, in July and August, Zhang Jianping controlled another wave of the market. Although he did not reach the previous high, he still made a fortune, earning more than 5 million yuan.

Will there be a third wave of market movement?

There might be.

But the height won't be too high.

The reason is that there are too many short-term concepts that market funds can speculate on now. These include not only the iPhone 3GS concept, the third-generation communication technology concept, and the low-carbon economy concept, but also the quietly emerging Internet of Things concept. With the severe diversion of funds, speculative funds and institutions are not stupid. If they push the price too high, they are likely to get stuck with it.

Even if there is still capital to speculate on the H1N1 flu concept, it is unlikely to recreate the booming scene of April and May, where short-term funds from the entire market gathered together. This is what is known as "speculating on new things, not old ones".

The Chinese version of the iPhone 3GS has just been launched, and a buying frenzy has swept the country on the first day, which is the peak of market sentiment. Once China Unicom is suspended from trading and investigated, it will undoubtedly suppress the release of short-term funds.

The statement "Consensus creates value, and sentiment generates premium" is the core of the existing "Investor Mindset".

Many people understand that consensus creates value, but few understand why emotions can generate a premium.

Anyone who gets married often knows that a diamond ring is usually needed for a marriage proposal.

Unlike gold, diamonds are very easy to synthesize artificially. In addition, the world has a large diamond reserve, resulting in a significant premium. Once they leave the store, they will generally be discounted by 30% or even more.

Returning to the point that a marriage proposal requires a diamond ring, and mustering the courage to propose to one's lover is itself a manifestation of emotion.

In layman's terms: When you're about to propose to your partner, who cares about whether the diamond ring is overpriced?
And so, emotions have created a premium.

……

Shanghai World Financial Center.

Chaotic Investment Floor.

What Xu Xiang could think of, Ge Weidong could also think of. When he saw ten identical seats on the China Unicom Dragon and Tiger List, he couldn't hold back anymore and complained: "Last time they seized on the loophole that the synthetic peptide hepatitis B vaccine was a failed product of the American company Cytel. This time, unable to find a problem with the iPhone 3GS itself, they thought of using regulatory rules to suppress market speculation. The people in the Mysterious Poker Organization are really a bunch of beasts!"

He trades futures and doesn't have a direct understanding of the scoundrels on Fuchun Road.

However, as Chaos Investment expanded its operations across markets, investing in Shancheng Beer and China Unicom, Ge Weidong realized just how ruthless the control style of the mysterious poker organization, which included Fuchun Road, Mr. J, Zhang Yang, and others, was.

"They'll stop at nothing to achieve their goals; no wonder they're called a livestock farm."

Ge Weidong muttered to himself.

(Will we ever meet again?)

(I have been praying before the Buddha for thousands of years)

The ringtone of "Seeking Buddha" pulled Ge Weidong back to reality.

He picked up his phone to check the caller ID; it was a call from Xu Xiang.

"Hello, Manager Xu."

Ge Weidong pressed the answer button.

"We've been tricked. They didn't play by the rules. By controlling the stock exchange's trading data, they're trying to provoke the China Securities Regulatory Commission. China Unicom will most likely be suspended from trading," Xu Xiang said, getting straight to the point.

"What's done is done, there's nothing we can do. None of us expected them to be so shameless," Ge Weidong sighed.

"Isn't there any way to pull some strings? At the very least, don't let the stock be suspended from trading!"

Xu Xiang was truly at his wit's end. Compared to Fuchun Road and Mr. J, he suddenly felt that his own character and morality were ridiculously high.

"I'll try my best to contact them. They shouldn't be suspended from trading. I also hope that the iPhone 3GS can withstand the test of the market."

"There's definitely no problem with that. The iPhone 3GS is sold out, so it can't be faked."

"Yes, try to stabilize market sentiment as much as possible."

"I will try my best to create momentum online and try to find out what they really want to say. We are all in this together now, and I hope we can work together to fight against the mysterious poker organization."

"That's natural, don't worry."

The two chatted for another ten minutes or so, and a sense of camaraderie and mutual appreciation emerged between them.

Xu Xiang and Ge Weidong never expected that the mysterious poker organization could come up with new tricks in a seemingly flawless betting game; it was simply beyond their imagination.

(Will we ever meet again?)

(I have been praying before the Buddha for thousands of years)

Not long after Ge Weidong hung up the phone, his cell phone rang again.

This time it wasn't Xu Xiang, but Lin Qi, a lawyer from Dacheng Law Offices.

"Hello, Attorney Lin."

Ge Weidong took the initiative to greet him.

"Hey Mr. Ge, it's 4 PM. The Hong Kong stock market has already closed. Party C asked me to contact Party A and Party B to confirm the anchor price. This call will be recorded as evidence of the agreement. Are you available now?"

"convenient."

"Okay, Mr. Ge, let's begin. What is your name and the lender's name in the agreement?"

“Ge Weidong, Party A”.

"Well, as of Friday, October 30, 2009, the closing price of China Unicom's A-shares was 7.25 Chinese Yuan. Do you have any objections to the price?"

"no disagreement."

"As of Friday, October 30, 2009, the closing price of China Unicom in Hong Kong was HK$11.68. Do you have any objections to the price?"

"no disagreement."

"Okay, according to the 'Huaguo Unicom Stock Lending Agreement,' the price of the lent shares is anchored to the closing prices of the two stock exchanges on October 30, 2009. Therefore, it is now determined that the anchor price agreed upon by you three parties, A, B, and C, is 7.25 yuan for Huaguo Unicom A-shares and 11.68 Hong Kong dollars for Huaguo Unicom Hong Kong shares. Does Mr. Ge have any objections?"

"No."

"Thank you for your cooperation, Mr. Ge."

"It's just part of the protocol process, that's to be expected."

"Then I won't bother you any longer, Mr. Ge, because I still need to confirm with Zexi Private Equity by phone. I wish you all the best."

"Thank you."

Ge Weidong politely thanked him and then hung up the phone.

A resounding victory?

He feels extremely uncertain right now.

The bottom line and ethics of the mysterious poker organization were far below his imagination.

Ge Weidong had secretly vowed that if China Unicom continued to lose money, he would never touch stocks again and would instead stick to futures trading.

……

Beijing, China.

Inside the courtyard of a traditional Chinese courtyard house.

Bao Xingwei was lying in a rocking chair, enjoying his leisurely time in his twilight years.

Today, the temperature in Yanjing is 15 degrees Celsius. With direct sunlight, the perceived temperature will be slightly higher.

Seeing Bao Xingwei enjoying a sunbath, Cheng Hongfa couldn't bear to disturb him. However, Zhang Yang's actions towards China Unicom made him realize that this was an excellent opportunity to complain. Perhaps he could use this opportunity to obtain the resources that Bao Xingwei was giving to Zhang Yang.

4: p.m.

5 pm.

5: p.m.

Time passed slowly, the sun gradually withdrew its brilliance, and the temperature in Yanjing gradually decreased as the sun set.

As the warmth faded, Bao Xingwei opened his blurry eyes and asked in a low voice, "Xiao Cheng, what time is it now?"

"It's 5:30, Mr. Bao."

Cheng Hongfa responded quickly.

"I've been sleeping for so long, time really flies." Bao Xingwei didn't know whether he was lamenting the afternoon or reflecting on his past.

Even though he is approaching 100 years old, and nearly 80 years have passed since he was 20, Bao Xingwei still feels that he was 20 years old just yesterday.

Someone once said that memories are like a bottle of wine that is fermenting. The ordinary times of youth may seem like the best period of one's life, but many years later, one realizes that such days may never come again.

"Is there another dinner party tonight?" Bao Xingwei asked again.

"Yes, Professors Li Yining, Xiong Xinghuai, and Cao Fengqi invited you to discuss topics related to the 2010 Davos Forum."

Cheng Hongfa replied.

The Davos Forum is divided into winter and summer sessions. The winter Davos Forum is usually held in January, while the summer Davos Forum is held in June.

What is the Davos Forum?
The Davos Forum was founded by Klaus Schwab in Geneva, Switzerland in 1971. The first meeting was held in the Swiss town of Davos, hence the name Davos Forum.

Unlike other superficial economic forums, the Davos Forum is a highly international economic forum and the world's most prestigious venue for fame and fortune. It attracts numerous political and business figures every year and can be considered a barometer of global economic development.

As renowned Chinese economists, Li Yining, Xiong Xinghuai, and Cao Fengqi would naturally not be absent from such an important occasion. They had already revised their speeches as early as September. However, Bao Xingwei did not want to travel abroad due to health reasons, so he did not plan to attend the 2010 Davos Forum.

“Oh right, Lao Li and Lao Xiong asked me to talk about the macroeconomic development of Asia. I need to prepare properly for that,” Bao Xingwei said, sitting up.

"Old Bao."

Cheng Hongfa called out "Bao Xingwei." (1 second)

3 seconds.

5 seconds.

Cheng Hongfa remained silent for a long time.

Bao Xingwei's expression shifted slightly, vaguely sensing that something had happened. He stood up and said, "Don't be so coy, just say what's on your mind."

"It's all about being flamboyant..."

Cheng Hongfa hesitated, as if he wanted to say something but then stopped.

"What's wrong with Zhang Yang again?" Bao Xingwei stretched his arms a few times, his tone seemingly indifferent, but his heart skipped a beat.

“Zhang Yang… Zhang Yang controls China Unicom. Today, all ten seats on the Dragon and Tiger List are his.” Cheng Hongfa spoke very quickly, as if he had made a huge decision.

"A shares?"

Yes, China Unicom (A-share listed).

"I see."

"Zhang Yang is getting increasingly powerful. Last time he took down Mr. J, and this time he's controlling China Unicom. The worst part is he's using your name. I reckon the China Securities Regulatory Commission will be..."

Cheng Hongfa didn't continue speaking. What he wanted to express was actually quite clear: he wanted to persuade Bao Xingwei to cut ties with Zhang Yang to avoid ending up with a ruined reputation in his later years.

As a seasoned veteran nearing 100 years old and having spent most of his life navigating the stock market, Bao Xingwei's thinking has always been unconventional; to be precise, he habitually thinks in reverse.

Why did Cheng Hongfa file a complaint?
Why has he been paying attention to Zhang Yang?
What does he want to obtain?
Based on Cheng Hongfa's previous hostility towards Zhang Yang, Bao Xingwei carefully reviewed the timeline of their meetings and roughly understood Cheng Hongfa's motive for complaining.

"What can you do?"

Bao Xingwei asked the question knowing the answer already.

“We will give him a break.” Cheng Hongfa had barely finished speaking when he quickly added, “After all, they don’t know whether Zhang Yang did this with your permission, Elder Bao.”

“You make a good point.” Bao Xingwei nodded slightly. Just as Cheng Hongfa was overjoyed, thinking that Zhang Yang would “fall out of favor,” Bao Xingwei suddenly changed the subject and said, “Speculative capital is always going to stir up some trouble.”

"But…"

Cheng Hongfa was still saying something.

"No buts, let them play their game among domestic investors," Bao Xingwei stated, clarifying his position.

Domestic investment is a compliant practice, and regardless of whose pocket the money flows into, it does not affect the state's collection of stamp duty and transfer fees.

As long as it's not shorting the index, or indicating that it's going against national funds, the regulatory力度 (intensity/strength) for domestic capital speculation is not strict.

To reiterate, the A-share market needs speculative capital, just like the lottery needs lucky winners. If there were no stories of overnight riches, who would invest real money in the A-share market? And who would buy lottery tickets?
Although Bao Xingwei favored Zhang Yang, he also made it clear that if Zhang Yang crossed the line, the next person to go to Shanghai would not be Bao Xingwei, but a special investigator.

"Let's warm up the car and get ready for the dinner appointment," Bao Xingwei changed the subject.

"Okay, Mr. Bao."

Cheng Hongfa responded quickly.

He was also good at reading people's expressions. Since Bao Xingwei was determined to favor Zhang Yang, he had no choice but to use some extreme measures. Just a couple of days ago, he took some time to go to the State Administration for Market Regulation and got a copy of the settlement statement from Lin Yifei.

……

October 31st, Halloween.

With the explosive popularity of the iPhone 3GS in the Chinese market, Yang Xingping, the top executive of TCL Group's communications business, finally made up his mind to resign and accept Zhang Yang's investment.

Smartphones that support 3G networks represent an unprecedented opportunity.

On the very day Yang Xingping made up his mind, Zhang Yang, who was attending a dinner party for mobile phone panel manufacturers that evening, finally met the chief negotiator from Samsung Group, whom he had been longing to meet.

"Mr. Zhang, this is Lee Boo-jin, the president of Samsung Group. She will be the one to discuss the mobile phone panel issue with you."

Lee Yeon-beom, General Manager of Samsung Group in China, greeted Zhang Yang with a smile.

Lee Boo-jin, standing to the side, wore a well-tailored black business suit, exuding a capable and elegant aura. Her features appeared even more aloof with her simple, slightly wavy short hair, especially her deep eyes, which seemed to look at everyone with a hint of disdain.

As one of South Korea's top chaebols, she certainly has the right to look down on others.

Zhang Yang extended his hand and greeted him in fluent English, "President Li, I never expected to be able to discuss the distribution rights for Samsung LCD screens in China with you. It's a great honor."

"What I'm curious about is, why would someone like you who runs a financial website want to be an agent for LCD mobile phone screens?" Li Fuzhen ignored Zhang Yang's outstretched hand and kept looking at the 22-year-old young entrepreneur.

Seeing that the other party had no intention of shaking hands, Zhang Yang withdrew his hand and said with a faint smile, "To make money, a very simple reason."

Lee Boo-jin was taken aback by the concise statement, but she quickly recovered and asked the question that HR professionals love to ask: "Give me a reason to choose you."

“I can make money for Samsung Group,” Zhang Yang said succinctly as always.

Cooperation and mutual benefit mean that both parties can make money; this is the basic requirement.

Before Lee Boo-jin could speak, Zhang Yang invited the two to sit down, saying, "Why don't we sit down and talk? It will also make it easier for the waiter to serve the food."

Lee Boo-jin sat down at the seat Zhang Yang indicated, and then said, "You are the most straightforward businesswoman I have ever met in negotiations, but at the same time I also want to know how much profit growth you can bring to the Samsung Group next year?"

"I'm not sure how much profit growth this will bring, but those who know me well know that I'm called the Gambler in the industry. We'll bet on whatever profit growth President Li expects."

Zhang Yang said calmly.

Capital loves betting because it can anchor the highest returns with the lowest cost.

Take the futures market as an example. The contract is essentially a gamble, transferring the risk to investors in the derivatives market.

"God of Gamblers?"

Lee Boo-jin didn't understand what that meant.

Seeing Lee Boo-jin's puzzled expression, Lee Yeon-beom, who had lived in China for over a decade, quickly explained, "It means God of Gamblers."

"I see."

Lee Boo-jin suddenly realized that before attending the dinner, she had already researched Zhang Yang's entrepreneurial experience and knew that Caiyan.com and Alibaba had a performance-based agreement. However, now, that agreement should have been exceeded.

Zhang Yang, who was standing to the side, did not speak. Instead, he waited for Li Fuzhen to mention the profit. No matter what she said, he was confident that he could meet the target, because the Chinese smartphone industry would experience explosive growth in the next two years.

"20 billion. If you can bring Samsung Group an annual profit increase of 20 billion Chinese yuan, I will consider signing an exclusive agency agreement with you."

Lee Boo-jin's eyes flashed with a hint of mockery. She didn't believe Zhang Yang could bring Samsung Group an annual profit increase of 20 billion Chinese yuan. The reason she quoted such a high price was to make Zhang Yang obediently lower his head and beg her.

根据三星集团内定的手机屏幕供应价格，2.0英寸QVGA屏幕是8-12美元，3.0英寸QVGA非触控屏幕是12-18美元，而触控式要到15-25美元，3.2英寸HVGA屏幕是20-30美元，至于最贵的3.5英寸WVGA屏幕，则是要卖到30-40美元。

Taking the most expensive 3.5-inch WVGA screen as an example, with a median value of $35 and a cost price of $10, the net profit is $25.

As of October 31, the exchange rate of the US dollar to the Chinese yuan was 1 to 6.83 yuan. In other words, to achieve an annual net profit growth of 2 billion yuan, 1171.3 million 3.5-inch WVGA mobile phone screens would need to be sold.

Is 1171.3 million yuan a lot?

Much!
This is equivalent to selling 1000 million high-end smartphones annually, which is practically an impossible task for a new company.

"no problem."

"no problem?"

As soon as Zhang Yang finished speaking, Li Fuzhen couldn't help but frown and quickly emphasized, "A 20 billion annual net profit increase, not annual revenue, are you sure there's no problem?"

“No problem, this year doesn’t count. Also, I hope to set a five-year target of 10 billion, for example, to increase Samsung Group’s net profit by 100 billion in 2010, 15 billion in 2011, 25 billion in 2012, 25 billion in 2013, and 25 billion in 2014,” Zhang Yang said indirectly.

"You're betting five years?"

Lee Boo-jin also sensed something amiss.

No wonder she agreed so readily. She knew it; given the current state of development of China's smartphone industry, how could it possibly achieve a net profit increase of 20 billion yuan over Samsung Group in just one year?

"That's the general idea," Zhang Yang said with a faint smile.

As a reborn individual, he was well aware of what would happen in the next five years and the major reshuffling that would occur in the mobile phone industry.

Who would have thought that a major international brand like Nokia would go bankrupt?

The "opportunity of the times" is less a trend and more a redistribution of market share.

Zhang Yang's ambitions extend beyond the secondary market; he also aims to control the primary market for mobile phones. If all goes well, cryptocurrency exchanges would also be a viable option.

"100 billion in 5 years".

Li Fuzhen murmured to herself, wondering if China could really bring Samsung Group so much net profit growth.

Moreover, judging from his boastful tone, it seems that the figure will far exceed 100 billion in 5 years...

After careful consideration, Lee Boo-jin couldn't help but ask, "Did you obtain a special operating license?"

If one has a special operating license, it might be possible to achieve a market monopoly; otherwise, it would be too difficult.

"President Li, you don't need to worry about that. As long as you agree, I can guarantee the supply of the latest LCD mobile phone screen assemblies and OLED mobile phone screen assemblies, with a net profit of 100 billion over 5 years, and no less."

Zhang Yang smiled faintly.

"How do you know about OLED phone screens?" While Lee Boo-jin was still pondering the annual net profit, Lee Yeon-beom, who was standing next to her, couldn't stay calm and questioned Zhang Yang about the source of his information.

Currently, the mainstream technology for mobile phone screens is LCD screens, while OLED mobile phone screens are a new technology that Samsung Group is working on.

The difference between LCD and OLED screens is that LCD screens are not self-emissive and rely on a backlight layer, a liquid crystal layer, and a polarizer to work. The principle is that the backlight layer emits white light, the liquid crystal layer "blocks"/"transmits" light by changing the molecular arrangement, and then the light is displayed through a color filter.

OLED screens are self-illuminating, requiring no backlight layer. They directly display colors by controlling the on/off state and brightness of individual pixels, and do not require color filters.

"Who is your source?"

Lee Boo-jin looked at Zhang Yang warily.

OLED screen technology is Samsung Group's main driver for next-generation screens, and only a very small number of senior executives within the company know about it.

Zhang Yang picked up the Moutai liquor on the table, still calm and composed, and said, "You two don't need to care about my sources or other messy things. You just need to understand one thing: I can make money for Samsung Group, and I can also make money through Samsung Group's screen supply. It's that simple."

After speaking, Lee Yeon-beom looked at Lee Boo-jin, waiting for her answer.

Lee Boo-jin, who was standing to the side, put away the disdain in her eyes and looked at Zhang Yang with more caution. She could clearly sense that this young entrepreneur was unusual, and cautiously replied, "I will give you a specific answer within seven days."

(End of this chapter)