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

Chapter 274 Gang Goes to Hong Kong to Exercise Rights, China Unicom Turns from Short to Long
"Nice!"

"China Unicom's stock price has hit the daily limit down, haha!"

"Joker is awesome!"

"Nice, hahaha!!!"

When China Unicom hit its daily limit down, Liao Guopei, Lin Guangchang, Zeng Lingshan, Feng Weiqiang, and Chen Xiaoqun were all incredibly excited in the trading area on the seventh floor of Building A in Changtai. None of them had ever imagined that a blue-chip stock worth hundreds of billions could actually hit its daily limit down, and even the date was such a coincidence.

"Snapped--"

Liao Guopei gave Lin Guangchang a high five, then with a playful look in his eyes, he joked, "The Double 11 shopping discounts have actually reduced China Unicom's stock price by 10%, haha."

"Pfft."

Lin Guangchang couldn't help but exclaim, "I bet even Ma Yun didn't expect that the Double 11 shopping festival could offer discounts on stocks."

"China Unicom's A-shares hit the 10% daily limit down, and its Hong Kong-listed shares, which have no daily price limits, have fallen even more sharply, dropping below HK$10. Does that mean we can exercise our options and sell?"

Feng Weiqiang looked at Zhang Yang.

100 billion!

Their own group holds a staggering 10 billion in stock options!

Now that the strike price has been reached, and given that it is an American-style option contract, the profit settlement can be requested from financial institutions in Hong Kong at any time.

"Are you selling it?"

Chen Xiaoqun looked at Zhang Yang.

In an instant, everyone present turned their attention to Zhang Yang, the "gang leader".

With 100 billion in put options and 30 billion in short selling, if they choose to take profits now, they could take away at least a billion, or even more than 20 billion.

Profit-taking?

Or should we continue to wait?

"Um……"

After careful consideration, Zhang Yang made a decision: "Yangjia, call the financial institutions in Hong Kong and take profits at the current stock price. Wuyingjiao, book three plane tickets to Hong Kong. We'll head over there later. Xiaoqun, Tuixue, and Xiaoyu, use all our remaining available funds to buy up China Unicom stock at the bottom."

"what?"

"Buy China Unicom at rock-bottom prices?"

"Flips a lot?"

Zeng Lingshan, Feng Weiqiang, and Chen Xiaoqun all stared wide-eyed, not expecting Zhang Yang to suddenly become bullish on China Unicom.

As the three men looked on in confusion, Lin Guangchang, also puzzled, asked, "Didn't the Chinese version of the iPhone 3GS expose all of China Unicom's dirty secrets? Is it still worth holding onto this stock?"

“Yeah, Joker.” Liao Guopei was also puzzled and asked, “With such a strategic mistake, China Unicom will have a hard time recovering in the short term. It’s even broken through the 20-day moving average. Are you trying to gamble on a rebound after a sharp drop?”

“It’s not a rebound from oversold conditions, but a reversal from oversold conditions.” Zhang Yang smiled calmly and explained, “China Unicom has fallen for five consecutive trading days, and the stock prices of both the Shanghai and Shenzhen stock exchanges have fallen by more than 20% from their highest points. The premium brought by the domestic version of the iPhone 3GS has also been basically wiped out.”

"In other words, no matter how well the sales of the Chinese version of the iPhone 3GS are, it will be difficult for it to cause drastic fluctuations in China Unicom's stock price. We may buy today and the stock price may fall tomorrow, but the downside is already quite limited. Now we need to focus on its 3G business prospects and market rescue measures."

Many retail investors only know that the investment logic of A-shares and Hong Kong stocks is different, but in fact, the investment logic of blue-chip stocks and hot stocks are also vastly different.

Hot stocks are driven by factors other than performance, technical reserves, and technical patterns. Their rise and fall are solely determined by market sentiment and capital flows. They are like a gust of wind, coming and going quickly. Some stocks can multiply in value, while others can be halved or even halved in value.

Blue-chip stocks are different, especially iconic blue-chip stocks like China Unicom with market capitalizations exceeding 100 billion yuan. Their large market capitalization means they are not easily influenced by short-term market sentiment and capital flows. The only factor that can cause fluctuations in the prices of blue-chip stocks with market capitalizations exceeding 100 billion yuan is future earnings expectations.

Another crucial difference between blue-chip stocks and hot stocks is that they can be trapped. Blue-chip stocks can be bought more and held on, and with dividends and cyclical rotation, they can usually break even within three to five years. However, if blue-chip stocks are trapped and held on, they will only sink deeper and deeper, making it difficult to recover their losses, and they may even be delisted.

Of course.

Being stuck with blue-chip stocks doesn't guarantee a recovery.

Take ST Zhongfangji for example. This once-blue-chip stock has seen its value halved multiple times. However, its biggest problem is that the industry is facing expectations of decline, which is extremely fatal.

In general, the investment logic for blue-chip stocks is linked to future performance expectations. Even if the industry is saturated and there is no significant growth, it is fine, but blue-chip stocks in industries with declining prospects should not be chosen.

Liao Guopei understood and replied, "So, we're not talking about buying its domestic iPhone 3GS now, but rather its 3G business and its market rescue plans?"

"Hmm." Zhang Yang responded, half-jokingly saying, "Buy it first, then we'll figure out how to get out once we're stuck with it."

"Haha, I'll buy it first and then figure out what to do once I'm stuck with it."

Lin Guangchang couldn't hold back any longer.

If he hadn't known Zhang Yang, he would have thought it was some nobody talking.

“Boss is so funny, but we still have more than 9 million yuan in usable funds. Shall we go all in one day?” Zeng Lingshan asked again.

Since early November, when they sold off 200 million shares of China Unicom at an average transaction price of 7.59 yuan, the "Zhangjiang Gang" has had 20.305 billion yuan in available funds.

Of the total, 9 million yuan was invested in Internet of Things (IoT) concept stocks, and the remaining 11.3 billion yuan was used to purchase 2.2 million yuan worth of Haitong Foods shares yesterday. The "Zhangjiang Gang" now has 9.1 million yuan in available funds.

"Um……"

Zhang Yang thought for a moment and said, "It's okay, just buy as much as you want, consider it as establishing a base position."

He maintains the same viewpoint: after removing the premium of the Chinese version of the iPhone 3GS, he does not believe that China Unicom's stock price will continue to fall indefinitely. Based on the information disclosed in the third quarter report, it appears that there is a bottom in its performance.

China Unicom's revenue in the third quarter was 397 billion yuan, a slight increase of 0.6% compared to the previous quarter. This was mainly driven by the growth of broadband services. Among them, GSM mobile service revenue was 175 billion yuan, an increase of 9.3% year-on-year, but the average revenue per user decreased by 2.6% year-on-year.

In addition, its net profit attributable to shareholders of the parent company in the third quarter was RMB 9.1 million, a decrease of 10% compared with the previous quarter, mainly due to the increase in network operating costs and the increase in the sales expense ratio to 13.1%.

In the short term, revenue growth has slowed, with the main revenue still relying on 2G business. However, in the long term, the broadband business has begun to gain momentum, taking away China Telecom's core business. In addition, Zhang Yang is a newcomer and knows that 3G networks will reshuffle market share, which will directly impact China Mobile's core business.

Both China Mobile and China Telecom have a problem: they are unwilling to lower their own profits and suppress China Unicom's development momentum, which foreshadows the future "three-way competition".

……

Hong Kong Island, China.

Goldman Sachs office floor.

When Lin Guangchang called David Smith's cell phone, the other party was taken aback when he saw the contact name, and then quickly pressed the answer button and said, "Hello, Mr. Lin."

"Long time no see, President David," Lin Guangchang greeted him.

Before the other party could speak, he directly stated the purpose of the call: "It's like this, the exercise price of our 'Short-Term Out-of-the-Dots Option Contract' is HK$10, and now the share price of China Unicom has also fallen below HK$10. I plan to settle the profit at the current price."

He emphasized the "current price," wanting David Smith to settle the account immediately.

"Now?"

"Now."

"Mr. Lin, are you sure? China Unicom has already fallen below the 20-day moving average and may see further declines to find a bottom."

"I'm pretty sure."

"OK then."

David Smith was in a bit of a pain. Although it was Goldman Sachs' money that was being lost, losing so much at once meant he was sure to get a scolding from headquarters.

Goldman Sachs analysts have conducted a comprehensive analysis of China Unicom. They believe that once the controversy surrounding the Chinese version of the iPhone 3GS subsides, the stock price will definitely return to above HK$10, thanks to the growth of 3G and broadband services.

The other party's decisive fulfillment was truly unexpected for David Smith; they had no time to push up the stock price.

Even if there is an emergency rally now, it will not be able to reverse the downward trend at all. On the contrary, it may cause retail investors to sell off their shares and suffer heavy losses.

"Mr. Lin, please wait a moment."

"Ah."

David Smith called over his subordinate, Solan Avery, and within 10 minutes, the initial pricing for the settlement was completed.

It's worth mentioning that Lin Guangchang didn't say he was in mainland China, but lied and said he had things to discuss in the morning and would make time to go to Goldman Sachs in the afternoon.

When Lin Guangchang and Goldman Sachs initially determined the settlement price, Zhang Yang also used Liao Guopei's mobile phone to call Citibank to exercise the "Short-term Out-of-the-Dot Option Contract" he held.

Citibank, HSBC, Goldman Sachs, Jaguar Fund, Morgan Stanley, as well as local Hong Kong financial institutions such as Tai Fook Securities and Sun Hung Fund, all received calls from Lin Guangchang and Zhang Yang.

In less than half an hour, news that a mysterious mainland short seller had cashed out billions of yuan worth of China Unicom options spread throughout Hong Kong's financial circles.

Like flies drawn to the smell of excrement, a large number of Hong Kong media outlets swarmed to the news and spread it rapidly.

Shocking Hong Kong! Mysterious mainland short sellers exercise their options and cash out, driving the price down from HK$11.68 to the HK$9.8 range, a drop of approximately 15.67%, netting at least HK$15 billion!

Unbelievable Betting: A Mysterious Mainland Short Seller Profits from Options Trading – Insider Guru or New Generation Trading Genius?

Goldman Sachs, HSBC, and Tai Fook Securities all suffered huge losses. Who exactly is this mysterious short seller from mainland China? Let us explain!

With the media coverage, many Hong Kong retail investors began to reflect on China Unicom's stock price the moment they saw the news.

[Young and Dangerous die-hard fan]: Have all 100 billion yuan in options been cashed out? Does that mean that China Unicom's stock price has bottomed out?

[Unforgettable Cherry Blossom Tree]: Why hasn't the identity of this mysterious short seller from mainland China been revealed yet? I'd love to know who this person is who dares to issue put options worth billions!

[The clock in the opposite direction]: The biggest short sellers of China Unicom have already cashed out; retail investors who still hold short positions are just waiting to be dealt with.

[The Unromantic Woman]: After five consecutive days of decline, with a pullback of nearly 25% from its peak, China Unicom's stock price may have truly reached its bottom.

While Hong Kong retail investors are still analyzing whether the market has bottomed out, China Unicom in mainland China has already seen a series of massive buy orders.

[Stock Anomaly Alert]: A super buy order of 5000 million yuan appeared in China Unicom.

[Stock Anomaly Alert]: A super buy order of 5000 million yuan appeared in China Unicom.

[Stock Anomaly Alert]: A super buy order of 5000 million yuan appeared in China Unicom.

The extremely high-profile purchase caught all retail investors off guard, especially the sell orders placed at the limit-down price of 6.44 yuan, which were instantly swept away, and the limit-down price was pried open by large funds.

6.45 yuan.

6.47 yuan.

6.55 yuan.

The moment the stock rebounded from its daily limit down, retail investors immediately diverged in their opinions.

[Guawazi Stock Trading]: Holy crap, how many orders are in the tens of millions? Has the national team arrived? The national team is here to save us!!!

[Jianghu Yuyu]: Don't be fooled, everyone. This is a trick by the main force to create a false breakout. They will close the price again soon. This kind of trick won't fool me!
[I didn't actually sleep that night]: I think it might not be a scam. The fact that a blue-chip stock worth hundreds of billions of yuan hit the daily limit down is really too exaggerated. It's very reasonable for the national funds to prop up the price. After all, we are at a critical moment in our pursuit of the "Nine Yang Divine Skill".

[I must marry Liu Tianxian in this life]: The impact of China Unicom's stock price hitting the daily limit down was indeed significant, directly dragging down the entire telecom operator sector.

Retail investors are still divided on the issue, while "mysterious funds" continue to buy.

[Stock Anomaly Alert]: A super buy order of 5000 million yuan appeared in China Unicom.

6.59 yuan.

[Stock Fluctuation Alert]: A super buy order of 5000 million yuan appeared for China Unicom. Price: 6.66 yuan.

[Stock Anomaly Alert]: A super buy order of 5000 million yuan appeared in China Unicom.

6.72 yuan.

Such a rapid price increase made even sellers hesitate, with some even canceling their orders urgently. It's unclear whether this was a government intervention to rescue the market.

Xu Xiang, who had just returned to Zexi Private Equity, witnessed this scene and immediately frowned, asking, "Who is interfering in China Unicom this time?"

"State funds? Or insider funds?" Sun Guodong frowned and guessed.

"The government's bailout funds won't just buy one stock, will they? Besides, the Shanghai Composite Index hasn't seen a significant drop. Most importantly, aren't Huijin and China Securities Finance Corporation only buying banks?"

Ma Xinqi's eyes were filled with doubt.

To prop up a blue-chip stock with a market capitalization of over 100 billion yuan, the amount of capital required is considerable, conservatively estimated at over 1 billion yuan, and even then, there's no guarantee of stabilization.

Who was behind this?

mechanism?

hot money?

Xu Haiou, who was standing to the side, thought for a moment and tentatively analyzed: "Under normal circumstances, Huijin and China Securities Finance Corporation might not buy individual stocks, but now is a critical period to ensure the smooth operation of the ChiNext market, so maybe they will make an exception?"

"Brother Xu is right."

Shu Yimin immediately agreed.

Xu Xiang also thought it made sense, muttering to himself, "In just a few minutes, they bought over 5 million yuan worth of chips. Could it really be the national team's funds rescuing China Unicom?"

……

Beijing, China.

China Securities Finance Corporation (CSFC) trading area.

The sudden surge in China Unicom's stock price disrupted the China Securities Finance Corporation's (CSFC) intervention decision, prompting team leader Teng Hexuan to immediately report to his direct superiors.

"Manager Xiao, I don't know if Huijin has intervened, but China Unicom's stock price has returned to the 6.7 yuan range, currently down 6.42%. Should we still intervene to push it up?"

"remit payment?"

Xiao Tao was somewhat surprised.

Before he could ask for details, Teng Hexuan spoke up again: "However, I don't feel that it's Huijin's operating method. It's too high-profile. It's more like speculative capital."

"Speculative capital is driving up prices?" Xiao Tao asked.

“Yes.” Teng Hexuan nodded and shared his insights: “A series of super buy orders of 5000 million is very high-profile. Logically speaking, if it were Huijin, they would most likely control the 90 fluctuations and gradually push it up.”

"Um……"

Xiao Tao fell into deep thought.

Not a moment.

He raised his head again and looked at Teng Hexuan, saying, "I'll call Huijin and ask. Also, since China Unicom has already been delisted by funds, there's no need to get involved."

Generally speaking, the national team does not easily intervene in the stock market. They only get involved during stock market crashes, or in specific periods or for specific tasks, because the primary goal of national funds is not to make profits, but to maintain market stability.

Originally, China Securities Finance Corporation (CSFC) did not want to intervene when Huaguo Unicom hit its daily limit down. However, the ChiNext board had only been established for a short time and was still in its infancy. At this time, the stock market should not experience drastic fluctuations. Therefore, Xiao Tao and several other relevant leaders unanimously decided to control the decline of Huaguo Unicom to within 7%.

But now, before they've even made a move, someone else has already done it.

"Then I won't bother you any longer, Manager Xiao."

Teng Hexuan left quickly.

After he walked away, Xiao Tao picked up the receiver of the landline on the table, quickly dialed a number, and waited for the call to connect.

"Dududu-"

Not a moment.

The call was answered.

"Hello, what can I do for you?"

"It's me, Lao Chen, Lao Xiao."

There was a moment's hesitation on the other end of the phone, as if he was confirming the number. Then he said in surprise, "I really didn't notice it was your number, Lao Xiao. What's the matter that you're calling me all of a sudden?"

"Oh, just chatting."

"Nonsense, I know you too well. You're the kind of guy who only comes to me when he needs something."

"Haha, shall I get straight to the point then?"

"Just say what you have to say."

Xiao Tao knew Chen Huoguang was impatient, so he immediately revealed the truth: "Didn't the China Securities Regulatory Commission issue instructions to maintain the stable operation of A-shares and ensure the smooth listing of the ChiNext board? So, was Huaguo Unicom manipulated by your Huijin?"

"I'll have to ask about that."

Chen Huoguang did not reply immediately, but needed to understand the situation first.

"Okay, you go and find out first."

Xiao Tao nodded.

"Wait a moment," Chen Huoguang said, then left the office and went to find the relevant person in charge to inquire.

After a while.

He already knew what was going on.

When Chen Huoguang returned to his office, he picked up the landline receiver on his desk: "Are you still there, Lao Xiao?"

"Is there any result?"

Xiao Tao countered with a question.

"Well, we didn't buy any. We all assumed it was your China Securities Finance Corporation that bought them." Chen Huoguang had barely finished speaking when he asked suspiciously, "You called this number, so you didn't buy any either?"

"No."

Xiao Tao shook his head and said frankly, "I also wanted to say that if you were to buy this stock, you would be responsible for maintaining stability in this stock. It seems that other funds have entered the blue-chip sector."

“If it’s not your China Securities Finance Corporation or our Central Huijin Investment Ltd., with such a large amount of funds involved, the seats will definitely appear on the Dragon and Tiger List, and then it will be clear at a glance,” Chen Huoguang said in a deep voice.

China Unicom fell 10%, and although it was pulled back up, the fluctuation was real, and it is almost certain that it will appear on today's list of top gainers and losers.

While China Securities Finance Corporation (CSFC) and Central Huijin Investment Ltd. confirmed each other's positions without intervening, Cheng Hongfa was reporting to Bao Xingwei on the fluctuations in China Unicom's stock price in a courtyard house in Beijing.

"Mr. Bao, I really don't know what method Zhang Yang used to make China Unicom's stock price plummet to the daily limit."

"Are blue-chip stocks worth hundreds of billions hitting the daily limit down?" Bao Xingwei, lying on the recliner, looked surprised. He hadn't expected Zhang Yang to make such a precise judgment once again. It was quite unexpected.

Cheng Hongfa: "Yes, the decline in Hong Kong stocks was even greater, and Hong Kong media have reported that a mysterious short seller from the mainland is going to cash out all of his options contracts."

"Knowing when to quit while you're ahead is good."

Bao Xingwei nodded slightly.

He didn't care what methods Zhang Yang used, because as long as the money didn't flow out, there was always room for maneuver.

He also knew that Zhang Yang's recent aggressive actions were aimed at raising funds for the bidding for Xueyu Securities.

"Wouldn't a 10% drop in blue-chip stocks cause too much of a stir?"

Cheng Hongfa was somewhat worried, but not about Zhang Yang; he was worried that Bao Xingwei's reputation would be damaged as a result.

"Within the rules, reasonable competition is inevitable. No matter how fierce the storm, without some edge, you can't stand firm." Bao Xingwei's words had a double meaning.

The reason he didn't send Cheng Hongfa to the financial think tank was that the latter was too conservative and lacked any sharp edge.

It's important to understand that since the advent of nuclear weapons, wars between modern great powers are no longer fought with guns and cannons, but rather with financial warfare, a war fought without the visible smoke of gunpowder.

How terrifying is a financial war?
Thailand was once a true Asian powerhouse. From 1990 to 1995, Thailand's GDP grew at an average annual rate of 9.1%, making it one of the fastest-growing economies in Asia. By 1995, Thailand's GDP had exceeded US$1680 billion, ranking as the seventh largest economy in Asia.

Yet, this very developed and powerful nation suffered a setback in its economy due to a single, deliberate short-selling attack on the Thai baht, regressing from an industrialized country to a mere "tourism powerhouse."

……

3 pm.

The two major A-share indices closed.

The Shanghai Composite Index rose in the afternoon, reaching a high of 3186.6 points, before falling back to 3175.19 at the close, a drop of 0.11%, with a trading volume of 1444 billion yuan, ending its eight-day winning streak.

The Shenzhen Component Index also surged in the afternoon, reaching a high of 13200.08, but then plunged at the close, finishing at 13106.92 points, down 0.34%, with a trading volume of 885 billion yuan. Its eight-day winning streak was also ended.

As for A-share listed China Unicom, it faced selling pressure at the end of the trading day and finally closed at 6.65 yuan, a drop of 7.12%.

Hong Kong stocks also saw a narrowing of losses, currently trading at HK$9.92, a drop of 9.98%. However, as the market has not yet closed, the share price continues to fluctuate.

At 3:42 p.m., Zhang Yang, Lin Guangchang, and Liao Guopei landed on Hong Kong Island.

Just like last time, Zhang Yang found a coffee shop and remotely directed Liao Guopei and Lin Guangchang to go to financial institutions such as Citibank, HSBC, and Goldman Sachs to exchange all the options and short positions.

While the three were busy, the stock exchange's daily trading data for November 11th was also released, and China Unicom unsurprisingly made the list.

Xu Xiang, Zhao Danyang, Wang Yawei, Chang Shishan, Qiu Baoyu, Zhang Jianping, including Chen Huoguang and Xiao Tao, all immediately checked the stock exchange's trading data to find out who was making such a high-profile move in China Unicom.

Buying from the second brokerage: Jiangsu-Zhejiang Huaxin Securities Fuchun Road Branch.

Buyer: Galaxy Securities Changcheng Huimin Road Branch.

Buying from the 3th brokerage: Guangfa Securities Shanghai Central Ring Road Branch.

"Depend on!"

Xu Xiang couldn't help but swear. He only needed to look at the top three buyer brokerage firms to know who was making such a high-profile intervention.

"Fuchun Road is so flamboyant!"

"Damn it, what kind of crazy scheme has this guy come up with to trick people now?!"

He shorted when others were bullish, and went long when others were bearish. Xu Xiang couldn't figure it out; he simply couldn't understand that man's investment logic.

Let alone Xu Xiang, even Zhao Danyang, the "King of Private Equity," hesitated when he saw the list of brokerage firms, saying, "From short to long, what exactly is his buying logic? It can't be that the reputation of the Chinese version of the iPhone 3GS has reversed, can it?"

(End of this chapter)