Hong Kong’s 0.4% stock market decline on October 14th didn’t draw much attention.
In retrospect, people analyzing their bitter experiences discovered that Hong Kong’s richest man had shown foresight – back in September, he had used rights issues to raise over ten billion Hong Kong dollars from four companies, withdrawing substantial funds from the stock market. This increased Hong Kong investors’ confidence… Later when the crash came, the tycoon’s fundraising plans couldn’t be canceled, leaving investors’ faces stinging from the slap.
After this incident, whenever major consortiums announced large fundraising plans, investors’ hearts would tremble.
But that was all hindsight wisdom.
On October 14th, Hong Kong’s 0.4% decline truly didn’t shake market confidence.
Rewinding to that morning.
Xia Xiaolan seemed energized like she’d had an adrenaline shot. Just learning about the U.S. merger tax bill proposal on the 13th, she arrived at the company early the next day.
It was a Wednesday.
Ji Jiangyuan, a senior university student, was naturally in Beijing.
Xia Xiaolan’s other lieutenant Zhang Bailun was present. Upon arrival, she ordered Zhang Bailun to start short-selling… Zhang Bailun was dumbfounded, “Chairman Xia, the Hang Seng Index was still rising yesterday, and you’re saying too short-“
Xia Xiaolan showed her tyrannical side, “Just do as I say!”
Zhang Bailun discovered that Xia Xiaolan was basically picking stocks randomly, casually selecting several stocks, including Lu Family Media.
Zhang Bailun thought he understood the truth – Chairman Xia had been eyeing Lu Family Media all along, holding back for over two months until she couldn’t resist anymore.
But if she wanted to short Lu Family Media, why add several other stocks?
Influenced by the overall market environment, Lu Family Media has shown steady growth over the past six months, with share prices rising from 12 dollars at the beginning of the year to 19.6 dollars yesterday. Given this year’s Hang Seng Index growth, going long was more rational than shorting.
The other stocks were even more impressive, outperforming Lu Family Media. People were rushing to buy – who would short them?
But Zhang Bailun had no choice.
Persuasion was futile – Chairman Xia was too willful!
As the largest shareholder, and with Young Master Du busy handling the Du family chaos, who would care about Qihang Capital’s affairs?
Manager Ji could have advised against it, but he was at school… Zhang Bailun wanted to cry. On just the 14th alone, Xia Xiaolan shorted stocks worth over 90 million Hong Kong dollars, totaling 3.7 million shares from five listed companies.
This was burning excess money – what if the stocks didn’t fall?
Among the five shorted companies, if any stock rose by one dollar in a day, Qihang would lose that amount per share. With five companies rising, that meant losing 3.7 million, and two dollars meant 7.4 million – and that’s just for one day!
Zhang Bailun was panicking.
Xia Xiaolan told Zhang Bailun not to limit his vision to Hong Kong but to look at the world.
Look at the world.
Zhang Bailun didn’t quite understand.
By market close, he started to get it.
On the 14th, U.S. stocks fell 3.8%.
But Hong Kong stocks were barely affected, only down 0.4%, yet Chairman Xia had already turned bearish.
“Chairman Xia, yesterday Lu Family Media opened at 19.6 dollars and closed at 20.5. You sold one million shares, losing 900,000.”
While Hong Kong stocks fell 0.4%, Lu Family Media rose.
Xia Xiaolan glanced at him, “Scared by just 900,000? Continue today!”
It wasn’t just 900,000 – adding the other four listed companies, Qihang lost over 2.4 million in one day.
Zhang Bailun couldn’t stop her and didn’t understand, but felt uneasy – would Hong Kong stocks fall too?
No, it seemed unlikely.
U.S. stocks falling for two days hadn’t greatly affected Asia. America’s situation was special, with the government raising interest rates to support the dollar and the merger tax bill having an impact. Meanwhile in Hong Kong, on October 1st National Day, the Hang Seng Index had risen to 3,968 points, with all investors waiting for it to break the 4,000-point barrier.
It couldn’t be helped – after the 1984 Sino-British Joint Declaration, Hong Kong had experienced some turbulence, but now society was stable and prosperous, the economy was growing positively, and mainland China’s economy behind them was very stable. People had ample reasons to remain optimistic about the securities market!
The U.S. stock market’s two-day price fluctuation should just be a short-term adjustment, unable to affect Hong Kong’s stock market.
At least that’s what Zhang Bailun thought, and his thinking represented the vast majority of Hong Kong investors.
Instead, Xia Xiaolan’s operations showed cunning beneath their surface, leaving people confused!
Chairman Xia, please wake up!
But Chairman Xia wasn’t waking up at all – on the 15th, she continued selling 2 million more shares, including an additional million shares of Lu Family Media.
That meant a total of 5.7 million shares sold – any one-dollar rise would mean over 5 million in daily losses. Even with over 100 million, how many days could Qihang sustain such losses?
Seeing Chairman Xia like this, she showed no signs of stopping!
Zhang Bailun had prepared many arguments but hadn’t gotten to voice them before the 15th’s market close when U.S. stocks fell another 2.4%.
Wait-
U.S. stocks had fallen 6.2% in two days.
Zhang Bailun’s words of caution got stuck in his throat.
He needed to call Manager Ji for his opinion.
As soon as Ji Jiangyuan received the call, he told Zhang Bailun he was packing:
“I’ll be in Hong Kong tomorrow! Wait for me!”
Although Ji Jiangyuan had left the golf course job, he maintained contact with Bill. Before Zhang Bailun contacted Ji Jiangyuan, Bill had already called him. With America’s two-day decline hitting Bill’s stock account, he had asked Ji Jiangyuan what to do.
Ji Jiangyuan had already sensed something unusual, immediately requesting leave from school and booking a flight to arrive in Hong Kong a day early.
“Follow Chairman Xia’s orders. The company is hers – even if she loses all the money, it’s her right.”
In those two days, October 14-15, Xia Xiaolan had sold stocks worth over 100 million. Ji Jiangyuan understood Xia Xiaolan better than Zhang Bailun.
She could accept losing a few million as tuition fees but wouldn’t be crazy enough to put Qihang Capital in crisis.
Did Xia Xiaolan believe the U.S. stock decline would eventually trigger a Hong Kong stock market fall?
Ji Jiangyuan rushed to the airport, determined to reach Hong Kong as quickly as possible – classes? Classes were impossible now. If a storm was coming, for a business administration student, experiencing a major storm firsthand would be far more valuable than classroom learning.
His roommate Xiong Baiyan was puzzled by Ji Jiangyuan’s hurry.
At the doorway, Ji Jiangyuan turned back:
“I have three hours until my flight, need to be at the airport one hour early, so you have two hours. Gather as much money as you can for me.”
“Ji Jiangyuan, what’s wrong? Is it your family…”
Xiong Baiyan didn’t finish.
He knew Ji Jiangyuan’s mother was receiving treatment in Hong Kong, and Ji Jiangyuan went to Hong Kong weekly, both for part-time work and to care for his mother.
Had Ji Ya’s condition changed, requiring urgent funds?
Xiong Baiyan, a former track athlete, was straightforward. Without hesitation, he withdrew all his savings and scraped together 3,000 yuan for Ji Jiangyuan within two hours.
“Not enough, let me think of something else!”
Ji Jiangyuan patted his shoulder, “Thanks, brother. I won’t run off with the money – wait for me to return.”
If Xiong Baiyan had a Hong Kong entry permit, Ji Jiangyuan would have taken him directly to Hong Kong instead of asking for money. If things were as he suspected, this opportunity was too precious to miss!
…
With Hong Kong’s daily trading volume in the billions, Qihang’s actions couldn’t shake the market.
But Xia Ziyu’s CR Investment was closely watching Qihang Capital’s movements.
They had no choice – CR Investment’s executive director had always viewed Xia Xiaolan as an enemy. With Chairman Xia’s orders, CR Investment’s people couldn’t ignore Qihang Capital’s changes.
The “Three Hundred Million Dollar Rich Lady” title not only stabilized Xia Ziyu but also steadied CR Investment’s morale.
The worst outcome would be Du Chengrong’s death, executing the will, with Chairman Xia suddenly possessing 300 million in assets – CR Investment’s future would still be bright.
When Du Chengrong was conscious, CR Investment’s people would think about reporting to Mr. Du. With Du Chengrong in a coma, they naturally followed Xia Ziyu’s words completely.
Xia Ziyu had been resting at home to protect her pregnancy, absolutely forbidding any mishap to the fetus that could inherit 100 million. Hearing her assistant’s report, even her morning sickness seemed less severe:
“Qihang sold 2 million shares, shorting Lu Family Media?”
Xia Xiaolan was indeed petty – after Lu Yunshi offended her, she held back for over two months but still couldn’t resist.
Was it Du Zhaohui’s appointment as Chengrong Group’s acting chairman that made Xia Xiaolan extremely arrogant, leading her to short against the market, hoping to swallow Lu Family Media?
She wasn’t afraid of choking on such a big appetite.
Although Du Zhaohui had become acting chairman, he had his pile of troubles. Chengrong Group’s stock was still falling, and Du Zhaohui was stretched thin, unable to help Xia Xiaolan deal with Lu Family Media.
“Chairman Xia, about this matter…”
Xia Ziyu had one hand on her belly while holding the phone with the other:
“Qihang Capital’s funds aren’t unlimited. If she wants to go back against the market, let her lose everything. Mobilize CR’s funds – we’ll do the opposite of whatever she does!”