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

Chapter 59 Signing the Financing Contract
Everyone says graduation season is breakup season. Tao Yuang now seriously suspects that Zhang Yang is love-struck and can't think straight after being dumped by his girlfriend.

Otherwise, why would they immediately max out their leverage? This is completely unlike something an investment major would do; they have absolutely no risk management awareness.

People who leverage their full leverage are not uncommon, but those who can truly make money through leverage are extremely rare.

Anyone who has studied finance knows that the best way to make a steady profit in the A-share market or other stock markets is to use other people's money to invest in stocks.

This is why many fund managers ignore economic cycles, industry prospects, and macroeconomic data, and always go all in, since they don't lose their money. On the contrary, they can make a fortune by collecting fund management fees.

“5x leverage, 80. Xiaolong, give me the lowest interest rate, just to save me face.” Tao Yuang took out three thin Zhonghua cigarettes from his pocket and started offering them out.

He wouldn't meddle with other people, but Zhang Yang had to make market research reports to fool his superiors, so he had to take care of it.

Zhang Xiaolong took the slim Zhonghua cigarettes. If he remembered correctly, this pack would cost around 200 yuan, making it a premium cigarette among premium brands.

"Cha-"

Tao Yuang then took out a kerosene lighter and lit Zhang Xiaolong's cigarette.

Not a moment.

The office was filled with smoke.

None of the three men rushed to speak, but instead enjoyed the tranquility brought by nicotine, which was exactly the effect Tao Yuang wanted to achieve.

As the saying goes, cigarettes pave the way and alcohol builds the bridge; cigarettes and alcohol can solve 90% of the trivial matters encountered in daily life, and this is not an exaggeration at all.

Tao Yuang glanced at Zhang Yang, thinking that the latter should calm down.

Then he looked at Zhang Xiaolong and asked, "How much interest can you offer?"

Zhang Xiaolong took a deep drag on his cigarette, the burning tobacco glowing brightly red. He looked at Tao Yuang and said, "The minimum is 10%. That's the highest I can decide. If it's lower, we'll have to talk to our boss, Mr. Liu."

"10%, 80, the daily interest rate is 0.0274%, which means that regardless of whether you make any trades, you have to pay the financing company 219.18 yuan every day." Tao Yuang looked at Zhang Yang, seemingly giving him a final reminder.

"Yes, I understand."

Zhang Yang knew what Tao Yuang was implying, but in his view, leverage was just an ordinary financial tool. The reason why humans are superior to beasts like lions and tigers is that they know how to use tools.

Then, he looked at Zhang Xiaolong and said, "I have another question for you, Senior Brother Zhang. Is it true that interest is charged on non-trading days?"

"It depends on whether you choose to hold the shares over the weekend or not. We calculate interest on a daily basis. If you sell all your shares on Friday and choose to receive interest, then there will be no daily interest on Saturday and Sunday."

Zhang Xiaolong paused for a moment, then continued, "If you choose to continue holding the shares, you will still have to pay daily interest for the two weekend days because of the capital tied up."

This statement is quite clear: whether or not daily interest is paid for the two days over the weekend depends entirely on Zhang Yang's actions on Friday.

"Understood." Zhang Yang silently made a note of it, then asked again, "Who is the transaction manager I deal with daily?"

In 2009, when you sought off-exchange margin trading, the actual securities account you were trading in was not in your own hands. You needed to contact the trading manager of the margin trading company by phone and ask him to manually place orders for you.

This is why many unregulated margin trading companies can use demo accounts to fool customers and then run away with the money.

Zhang Xiaolong: "Let's not rush this. They're probably eating or resting. Let's sign the contract first, what do you think?"

"It will be all right."

"Then please wait a moment."

……

Seeing that Zhang Yang was determined to leverage his position, Tao Yuang didn't say anything more. Zhang Xiaolong, for the sake of his own performance, couldn't possibly refuse to close deals.

Not a moment.

The freshly printed, still slightly hot contract was placed in front of Zhang Yang. Zhang Yang and Tao Yuang each carefully checked the terms, then Zhang Yang signed his name and pressed his fingerprint on it with ink.

"The contract is in duplicate, one for you and one for me. Please keep it safe. Also, the financing process can only start after your 20 yuan is deposited into our company account. If you have any questions, you can ask me or your trading manager."

"Okay, I understand."

"Let's go then, let's see which manager catches your eye."

Zhang Xiaolong put the contract in the drawer, then stood up and looked at Zhang Yang and Tao Yuang.

Zhang Yang also put the contract away, and now the terms and details have been basically agreed upon.

With a deposit of 20 yuan and leverage of 5 times, the leveraged amount is 80 yuan. The daily interest rate is 0.0274%, and the daily interest is 219.18 yuan. The interest settlement date is determined by Zhang Yang, but it can be accumulated for a maximum of 30 days, meaning that interest must be settled once every 30 days.

……

The three then moved to the trading office area of ​​Hongyue Investment, where the trading managers, who had just finished eating, were chatting with each other.

"Hey, Brother Wang, did any of your clients get liquidated this morning? The market opened really low today, the Shanghai Composite Index opened down 0.57%, and my only remaining client got liquidated."

“I still have two clients. One of them is probably blinded by losses and has increased his leverage from 2x to 10x. If the price drops again this afternoon, I’ll have to force liquidation.”

"Yesterday's drop was brutal; the market fell by 2.94%, and two of my clients hurriedly added margin."

"Same here."

"That's what gamblers are like, so interesting."

These trading managers in charge of operations do not have a formal financial background; some of them even only have a junior high school education.

Customers' margin calls are of no concern to them; on the contrary, they become the subject of their jokes during their leisure time.

Who doesn't have clients yet?

Zhang Xiaolong strode into the trading area, his gaze sweeping over all the trading managers.

The trading area was a large office space of about 500 square meters, where each trading manager had their own workstation. At this moment, about 40 men and women were looking at Zhang Xiaolong.

Looking at the massive trading office area, Zhang Yang couldn't help but marvel at the scale of Hongyue Investment. How much money must they make in a day just from margin trading?

"I, Manager Zhang, I don't have any clients right now, so I can work with you one-on-one."

"I don't have any clients either."

"Manager Zhang, I don't have any clients either."

About six or seven people stood up and quickly approached Zhang Xiaolong.

When the group arrived, Zhang Xiaolong looked at Zhang Yang beside him and said, "Pick one of them. They don't have any clients yet, so they can serve you better."

Who has been with the company the longest?

As soon as Zhang Yang finished speaking, a middle-aged man of about 37 years old, wearing silver-rimmed glasses, raised his hand and said, "I've been with the company the longest; I was among the first batch of transaction managers."

"Then it's you."

Zhang Yang made the decision on the spot.

Trading managers may sound similar to fund managers, but in reality they are worlds apart and their abilities are on completely different levels.

These so-called trading managers are nothing more than repeating the instructions they hear on their own computers; their work is even less complex than that of a court stenographer.

(End of this chapter)