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

Chapter 259 Stirring up Hong Kong's financial turmoil, various funds continue to increase their investment.

While Hong Kong's financial circles were being stirred up by a "mysterious short seller," mainland A-shares staged an extreme rebound in the afternoon.

Starting at 1 p.m., the Shanghai Composite Index was the first to show unusual activity.

Industrial and Commercial Bank of China, China Huadong Bank, Agricultural Bank of China and China Construction Bank all rallied, causing the intraday K-line chart to surge straight upwards.

With the banking sector supporting the index, other sectors all showed a bottoming-out V-shaped reversal. Among them, the securities sector, as the main force of the index, showed slight movement and the Shanghai Composite Index has already returned to 2989 points, just one step away from 3000 points.

Whether they are professional stock traders or part-time traders squeezing in time to trade during their lunch break, the moment they see the K-line surge, their emotions of "taking over 3000 points" are instantly ignited.

[My Beloved Wife Meow Meow]: Holy crap! The banking and securities sectors have been spiked to rock bottom! This is definitely state-manipulated trading, powerful and decisive, it'll crush anything that dares to challenge us!!

[She can't access the game]: Hahaha, I bet right. I knew the government funds would intervene and drive up the price. The ChiNext board plummeted as soon as it was established. Foreigners saw this and thought our A-shares were no good.

[Picnic Bro]: Come back, my proudest 6000 points. As a stock investor who witnessed the stock market crash during the subprime crisis, I think this round should at least reach 5000 points!
[Rich woman from Jiangsu, Zhejiang and Shanghai]: 5000 points? That's too conservative. The uncles in Shanghai told me that it will reach 6000 points this year and 18000 points next year. It's going to make us dizzy.

If you were to ask where the most stock market investors are, without a doubt, it would be the Yangtze River Delta region, especially Shanghai, where even a vegetable vendor might be involved in stock trading.

As the A-share market bottomed out and rebounded in October 2008, with the index surging by nearly 1800 points, the stock market, which was previously rarely discussed, has now become a topic of conversation again.

For the country, it's a great thing that there are people playing in the stock market, because stock trading generates transaction fees such as brokerage commissions, stamp duty, and transfer fees. Although the largest share of brokerage commissions goes to securities companies, don't forget that securities companies also have to pay corporate income tax.

To put it bluntly, most of the transaction fees generated by stock trading by investors actually go to the national treasury.

Hu Xijin, Zhou Runfa, and Li Daxiao, three prominent figures in the stock market, immediately expressed their opinions on their media accounts upon seeing the afternoon's upward movement in the index. Li Daxiao even pulled out a "turning point bull" from his own stock market.

[Hu Xijin]: Fellow investors, the two major indices staged a strong rebound this afternoon, with the Shanghai Composite Index approaching 3000 points again. My view remains unchanged: 3000 points is the golden ratio line. As long as the market index stays below 3000 points, I will buy without hesitation if it dares to fall!
[Chow Yun-fat]: All in, all in, all in, all in is a kind of wisdom!
[Li Daxiao]: The manufacturing PMI index has expanded for five consecutive months. Comrades, this is a truly super positive sign! The signs of economic recovery and the economic turning point of our country have appeared. A new round of wealth cycle is coming soon. Making money in life depends on cycles. Comrades, you are lucky. Let us embrace the "turning point bull market" and follow the main force to become the trendsetters of the turning point!
Driven by three prominent figures in the stock market, both the Shanghai Composite Index and the Shenzhen Component Index experienced accelerated upward movement. The gloom of 28 ChiNext companies hitting their daily limit down or nearing it was swept away by the market rally.

At this point, some people might ask, "Isn't the risk of the main players 'baiting' us with a sharp rise?"
Anyone who frequently trades stocks knows that retail investors, besides liking to buy at high prices, also have a short memory.

Even if the price drops by 50%, as long as there's a 5% increase, retail investors will rush back in, shouting that the bull market is here.

In the afternoon, when sentiment was high and retail investors were placing bets, a portion of funds acted very cautiously. This portion of funds was none other than the funds of fans who followed the "joker master's trading channel".

[Night Dance Allure]: Why hasn't Joker posted yet? Hu Xijin, Zhou Runfa, and Li Daxiao have all posted their predictions.

[Cola is the best]: Is something holding you back? Are you going to buy it or not?

[Fishing Guy]: I'm not sure what to do unless Joker points out the direction. I have a feeling that the market's sudden surge is a trap. What do you guys think?
[A Colombian Youth]: Based on my years of stock trading experience, a sudden price surge is most likely a trap, so everyone should be cautious.

Having become accustomed to the flamboyant posts, the retail investors on "joker's trading channel" dared not make any rash moves, because they had been fooled by this too many times and had developed a psychological aversion to it.

While retail investors on the "joker investment channel" were still anxiously waiting for Zhang Yang to post a notification, Zhang Yang, far away in Hong Kong, had finished solving his food problem and found a coffee shop to rest. He had spent the whole morning discussing securities lending with institutions in Hong Kong, which had left him exhausted, and he had to find a place to rest and replenish his energy.

It's worth mentioning that prices on Hong Kong Island are indeed extremely high; you can find meals at small restaurants that cost the same as those at star-rated hotels in Shanghai.

In contrast, Liao Guopei and Lin Guangchang stayed at the securities lending institution, where they could not only get free meals but also have a place to rest.

……

During their rest period in Hong Kong, the news of "mainland short sellers" had already spread throughout the upper echelons of Hong Kong's financial circles. Upon hearing about this, Fang Boxuan, a leader of the Bank of China Group in Hong Kong, immediately called his contacts at China Unicom.

"Dududu-"

After a brief busy signal, the call was connected.

"Huh? Brother Fang, what brings you here to call me?"

Yi Huimin was somewhat surprised. He knew that Fang Boxuan was the kind of person who wouldn't visit unless he needed something, and that Fang was in Hong Kong while he was in mainland China. Although the two had a relationship, it wasn't deep.

Fang Boxuan didn't mince words and said directly, "Huimin, tell me the truth, is there some negative news about China Unicom that hasn't been exposed? Why are mainland customers coming to Hong Kong Island to short sell?"

"Mainland tourists going to Hong Kong Island to short-sell China Unicom?" Yi Huimin paused, then suddenly realized something and asked, "Is the amount very large?"

“Very big.”

"How many?"

"Borrowing hundreds of millions."

"Hundreds of millions? That's unlikely, isn't it? Where would they get so much money to guarantee this?"

"Use mainland stocks as collateral at a discount."

After saying this, Yi Huimin remained silent for a while, then sorted out his thoughts and summarized: "In other words, a group of people recently went to Hong Kong and used mainland stocks as collateral to borrow China Unicom securities from institutions in Hong Kong to sell?"

"Yes."

Fang Boxuan nodded in confirmation, and then said, "So I wanted to ask if there are any hidden problems with China Unicom that haven't been exposed yet."

"That's definitely not the case."

Yi Huimin responded without hesitation.

He holds a high position at China Unicom, and I've never heard of any hidden problems that haven't been exposed.

Although China Unicom's investment of 10 billion yuan to sign the "Exclusive Agency Agreement for the Chinese Version of iPhone 3GS" with Apple may put short-term pressure on the company's cash flow, from a long-term perspective, this money is well worth it.

As it stands, the Chinese version of the iPhone 3GS has already brought tens of thousands of new customers to China Unicom, including wealthy customers who have signed up for packages priced at 128, 199, 399, or even 999 yuan. This doesn't even include the revenue share from selling iPhone 3GS units.

"Really not?"

Fang Boxuan was somewhat skeptical.

Yi Huimin: "Really, no. I'm known for being an honest man. Brother Fang, you have to believe me. Besides, I would never lie to you."

Listening to Yi Huimin's account, Fang Boxuan was puzzled and asked, "That's strange. If there's no definite negative news about China Unicom, how could someone dare to short it for hundreds of millions of dollars and actually commit suicide in Hong Kong?"

"Could it be that he's doing that?" Yi Huimin suddenly hinted.

"Which one?"

"That thing for washing things."

“Wash…” Fang Boxuan thought for a moment, then suddenly realized, but quickly shook his head and said, “That’s unlikely. Washing that thing is done in Macau.”

Suddenly, he contradicted himself, saying, "It doesn't seem impossible. I guess I'll have to check the transaction records of Citibank, Morgan Stanley, and HSBC."

The Hong Kong dollar is a currency exchangeable for the US dollar. Once money is exchanged for Hong Kong dollars, it's like it's available all over the world. This is a basic financial fact.

The sudden and unexpected surge in short orders makes it hard not to suspect that mainland funds are trying to exit the country.

Because Hong Kong Island is very small, and the circle is also very small, it's not just Fong Pak-hin who's investigating; the Hong Kong financial regulatory authorities are also investigating, trying to figure out the motives behind the short selling.

……

Under the shock of multiple short orders exceeding 100 million, the stock price increases of China Unicom in mainland China and Hong Kong showed a serious discrepancy.

Huaguo Unicom, which closed at 7.25 yuan on the previous trading day, is currently trading at 7.36 yuan, up 1.25%.

In contrast, China Unicom, which closed at HK$11.68 (equivalent to RMB 10.29) on the previous trading day, is currently trading at HK$11.42, a decrease of 2.23%, and the price difference between the two is narrowing.

The decline in Hong Kong-listed China Unicom shares has drawn the attention of retail investors in the A-share market, inevitably causing them to panic.

[年九不啾啾]: Wait, what's going on with Hong Kong stocks? Why are they still falling? What are foreign investors doing?
[Xiao Fu's Admiring Mushroom]: Could there be some negative news about China Unicom that hasn't been released yet? Hong Kong stocks actually fell!
[Slightly Tipsy Little Bread]: That shouldn't be the case. The sales of the Chinese version of the iPhone 3GS are so good, with more than 7,000 units sold on the first day. Logically speaking, the stock price of China Unicom should have been very promising.

[Little Orange]: As two of the three major telecom operators, China Mobile has a market capitalization of HK$1 trillion, while China Unicom's A-shares and Hong Kong-listed shares combined are only HK$4000 billion. Clearly, there is huge room for growth, and I am firmly optimistic about China Unicom.

Neither China Mobile nor China Telecom were listed on the A-share market in 2009, but they had already completed their listings on the Hong Kong Stock Exchange. Their market capitalizations, converted to Chinese yuan, were RMB 1.09 trillion and RMB 2639 billion respectively, with China Mobile leading by a wide margin.

In contrast, China Unicom has completed its listing on both the A-share and Hong Kong stock exchanges, with a combined market capitalization of 4000 billion yuan.

However, despite appearing to be the "second place," China Telecom is not actually the case. It has gradually narrowed the gap in market value with China Unicom by leveraging its broadband business.

China Mobile relies on telephones, China Telecom relies on broadband, while China Unicom is in the most awkward position, currently lacking its own competitive advantage.

Perhaps eager to build its own competitive advantage, China Unicom spared no expense to sign an exclusive agreement with Apple.

The decline in Hong Kong-listed China Unicom shares has not only attracted the attention of retail investors but also caught the eye of Xu Xiang.

Why did China Unicom's Hong Kong-listed shares fall?

Xu Xiang raised a question.

Upon hearing this, Sun Guodong, Ma Xinqi, and others immediately switched to the intraday chart of China Unicom in Hong Kong to check if the K-line had been targeted.

"Something's definitely not right. The water level plummeted this morning. I wouldn't have noticed if Brother Xiang hadn't pointed it out," Shu Yimin said, frowning.

"Is there negative news? The price started to drop sharply at 10:30, or did Mr. J make a move?"

Sun Guodong's eyes were filled with apprehension. He still had a lingering fear from the last battle with Shancheng Beer, and was afraid that "Mr. J" would pull another stunt.

"He dared to target China Unicom? The Chinese version of the iPhone 3GS is selling so well right now, and direct sales stores across the country are restocking. China Unicom might even surpass China Mobile in the future. How could he dare to do that?"

Ma Xinqi was puzzled.

“Foreign investors are much smarter than mainland investors, and I haven’t seen a surge in trading volume, so it doesn’t seem like a sell-off. I’ll go ask my friends in Hong Kong.” Xu Haiou said, picking up his phone and scrolling through his contacts.

"It's definitely something we need to understand; foreign investors are much more rational than domestic investors," Xu Xiang nodded.

The biggest difference between foreign and domestic capital is that foreign capital has strict discipline; they invest systematically and institutionally.

What is systematic, institutional investment?

Simply put, they are really good at analyzing financial statements. They can roughly estimate a company's performance by analyzing its cash flow, accounts receivable, debt ratio, and product sales, and then use that performance to infer the potential for stock price appreciation.

Take Microsoft, for example. It's currently the undisputed leader on Nasdaq, and countless investment banks study its quarterly results. As long as the results don't exceed market expectations, its stock price will be under short-term pressure. To put it bluntly, foreign investors don't accept empty promises. Their style is to use quarterly results to drive up stock prices, thereby achieving a high success rate. Northbound funds are also known as "smart money."

Domestic investors are a bit different. They put quarterly performance aside and their primary concern is whether the stock can be hyped up and whether the theme or concept is novel enough.

The different styles of domestic and foreign capital also lead to different investment targets: one prefers high-risk themes, while the other prefers value blue chips.

(The first snow of 2002)
(Arrived a little later than usual)
Xu Xiang's phone suddenly rang, immediately attracting the attention of Sun Guodong, Ma Xinqi and others. Xu Haiou, who was originally looking through his phone's contacts, also looked at Xu Xiang.

"It's Ge Weidong."

Xu Xiang picked up his phone from the table and said.

"It might also be related to the Hong Kong stock exchange China Unicom. I've heard that Chaos Investment has many Hong Kong business clients, so perhaps he has the answer," Xu Haiou then added.

"Ah."

Xu Xiang nodded slightly and pressed the answer button, saying, "Hello, President Ge."

“There’s something going on in Hong Kong. A friend of mine said that someone went to Hong Kong and opened a lot of short positions in China Unicom. Now, a number of financial institutions in Hong Kong are starting to be cautious about China Unicom.”

Ge Weidong kept it brief and shared what he knew.

"Mr. J?"

Xu Xiang asked tentatively.

"Most likely." Ge Weidong took a deep breath, his eyes flashing with confusion, and said, "I still don't understand where his confidence comes from. It's as if we're playing one against three, and they're throwing down their royal flush."

He was a little scared.

He felt the other person was crazy!

According to what he knew, the "mysterious financier" had already opened short positions worth over a billion yuan, and he had heard that he was also going to work on options contracts, as if he was going to gamble with his life.

How do you say this?

It's like a "game of the brave" where the rules are to take turns stabbing yourself with a knife until one of you surrenders.

Mr. J's actions were a bit like someone who, at the very beginning of a game, immediately inflicts dozens of damage on himself, gambling with his life against the countermeasures.

Do you dare to accept?
I'm really a bit uneasy.

"Could it be..."

Xu Xiang was about to back down, but then quickly shook his head and said, "No, that's not right. This must be a trick by the other side. They want to use short selling to create psychological pressure on us. That must be it!"

"Are you sure, Manager Xu?"

Ge Weidong truly lacked confidence.

He doesn't play the stock market much. The last time he lost heavily on Shancheng Beer and Guangfu Pharmaceutical, he was really a bit scared. Now, Huaguo Unicom is full of "gambling with his life".

"I'm sure that with the Chinese version of the iPhone 3GS selling so well, China Unicom's annual report will definitely exceed expectations. Trust me!"

Xu Xiang's tone grew increasingly firm, and he continued, "You're playing this high, huh? I'm going for it! I'm booking a flight to Hong Kong Island right now, and I'll be their counterpart!"

"hiss--"

Ge Weidong took a deep breath.

Not only Ge Weidong, but also Sun Guodong, Ma Xinqi, and Xu Haiou felt a pang of anxiety, their eyes flashing with worry.

Xu Xiang seems to be completely out of his mind now, and doesn't seem to care at all that China Unicom's stock price will plummet.

"We still need to calm down."

Ge Weidong advised.

Emotions can generate a premium, but they can also be a death sentence.

Many people may not understand why some people gamble away their entire fortune, even their wives and children, and feel that they would never become that kind of person.

But in reality, once emotions run high, people might risk everything, not just their wives and children, but even their own parents.

Why is this happening?

Ultimately, it all comes down to emotions.

When gamblers lose money, they think the same way as retail investors: they think they can win the next round and the price will rise the next trading day.

The more you lose, the more you buy; the more it falls, the more you buy. Before you know it, gamblers have lost everything, and retail investors have filled their positions. This is the power of emotions.

"call--"

Xu Xiang took a deep breath and exhaled.

After calming himself down, he said in a deep voice, "I mainly feel that the other side is bluffing, and we can press our advantage."

"Oh, who knows."

Ge Weidong shook his head.

He couldn't understand why "Mr. J" dared to place such a bet; the other party's aura had already made him want to back out.

……

And on the other side.

Deep in China.

Pure Heart Private Equity Firm.

Because his headquarters were near Hong Kong Island, Zhao Danyang knew about the "mysterious financier" shorting China Unicom in Hong Kong before Xu Xiang and Ge Weidong did.

He hadn't signed any betting agreements, so he wasn't flustered. However, the appearance of the "mysterious financier" made him more vigilant.

Between 11 a.m. and 2 p.m., he had made more than a dozen phone calls to inquire whether there was any potential negative news about China Unicom. He also had his own firm's analysts analyze the potential upside for China Unicom's stock price, and the final conclusion was...

1. No potential negative effects.

2. China Unicom's stock price will rise by at least 30%.

After receiving two key pieces of information, Zhao Danyang, known as the "top private equity investor" in China, did not hesitate and immediately prepared to go to Hong Kong Island to buy call options as quickly as possible.

For ordinary investors, if they don't even understand stocks, they'd be even less able to understand options trading.

However, for experienced traders, options trading is the best way to leverage small amounts of capital for potentially large gains.

Options trading is actually not complicated. It can be understood as a "buy-out directional contract". Once the premium is paid, it will not be refunded regardless of whether the price goes up or down. It is equivalent to buying an opportunity to exercise the right.

"I don't care if you're Mr. J or Mr. J8. As long as China Unicom has no potential negative impact and has good performance expectations, we should boldly take it on!" Zhao Danyang's eyes flashed with sharpness.

In Zhao Danyang's view, the reason why retail investors lose money is that they lack willpower.

As long as the direction is correct and it's within the national plan, you should buy more as the price drops and be bold in buying in, so that the subsequent gains will be greater!
For example, Zhao Danyang kept buying more as the market fell in 2007. Although he held on for more than a year, the outcome was good, and he gained returns that are hard for ordinary people to imagine.

"leave!"

Zhao Danyang packed his things, left Chizizhixin Private Equity, and headed to the border crossing.

It wasn't just Zhao Danyang; the Shenzhen gang's speculative capital from Yitian Road, Jintian Road, and Tairan 9th Road all went to Hong Kong Island to join the fun.

Zhang Jianping, who was far away in Jiangsu and Zhejiang, immediately contacted his friend in Hong Kong after hearing that Zhao Danyang had gone to Hong Kong to buy some call options, aiming to lock in the greatest return with the least cost.

Qiu Baoyu, who was suspected of being "Mr. A", was the last to know the news, around 3 p.m. when the market closed.

However, as soon as he learned of the news, he began to assess the value of China Unicom and discussed it with Qiu Gaocai and others.

"China Unicom's stock price can't possibly fall." Qiu Gaocai, scruffy and disheveled, picked at the mud on his toenails and said firmly.

"There is absolutely no possibility of a decline unless Apple terminates the partnership."

"Terminate the cooperation? The penalty for breach of contract won't bankrupt them!"

"If the other party really had that much power, why would they care about the small amount of money in A-shares and Hong Kong stocks? They would have already opened doomsday contracts in US stocks."

The speculative investors of the Minfu Brotherhood expressed their opinions one after another, and almost no one thought that the price would fall. After listening to everyone's opinions, Qiu Baoyu stroked his chin thoughtfully and said, "In that case, China Unicom can continue to increase its investment."

Short selling?

Going long is the only way to succeed!
……

As speculative funds and institutional investors increased their holdings in China Unicom, it was already 3 p.m., and the A-share market closed.

The Shanghai Composite Index closed at 3076.65, up 2.7%, with a trading volume of 1548 billion yuan, successfully breaking through the 3000-point mark. The Shenzhen Component Index closed at 12715.65, up 3.4%, with a trading volume of 993 billion yuan.

Due to aggressive buying by institutional investors and speculative funds, China Unicom surged in the final minutes of trading, closing at 7.59 yuan, a gain of 4.81%.

One hour later, at 4 p.m.

Hong Kong stocks also closed, with the Hang Seng Index closing at 21620.19 points, down 0.61%, with a turnover of HK$619 billion.

As for China Unicom in Hong Kong, due to the uncertainty among Hong Kong financial institutions regarding the "financial client's" intentions and true intentions, it ultimately did not rise but remained at HK$11.68, neither increasing nor decreasing.

When the Hong Kong stock market closed, Zhang Yang, Liao Guopei, and Lin Guangchang didn't take a break. They needed a price to calculate the premium for the over-the-counter options contract with the financial institution, and now that the price was available, they had to continue shorting!
(End of this chapter)