If one can grasp the essence of finance, it will seem simple. However, if one is confused by the data and models that envelop finance, feeling overwhelmed, then finance will appear complex and profound.
Basic financial theory is as simple as the sun rising in the east. But one can't make big money or quick money that way. So, the role of the financier emerges. He studies when the sun will rise in the east, the exact time each day, whether it will be cloudy, and a solar eclipse is equivalent to a black swan event in the financial world.
Are these things useful? Yes, but they are useless to most people. Some people are even fooled into believing the sun might rise in the west, and then... After Shanhai Capital packaged and embellished He Zhengcheng's 'gambling on national fortune' idea, it changed so much that even he couldn't recognize it, but everyone insisted he remember it.
As a rising star among analysts, a self-taught financial prodigy, He Zhengcheng's first research report influenced global finance. He was a vital part of Shanhai Capital, so packaging was essential, and everyone needed to speak with one voice.
On August 18th, the Hong Kong Stock Market opened without much fanfare, and trading volume seemed to have shrunk significantly. The Hang Seng Index saw a slight correction, hovering between 7150 and 7200.
Russia's debt default announcement, Long-Term Capital Management's visit to the Daxia Country's central bank, and international capital selling off bonds of the G7 nations seemed to exacerbate the complex situation.
Many investors might have been hesitant, confused, or perhaps the Hong Kong Monetary Authority didn't anticipate Soros's counterattack, choosing to wait and see. In any case, no one knew exactly why, but today's Hong Kong Stock Market closed without much excitement.
On August 19th, everything was auspicious, suitable for stock trading. Last night, America finally reported that Long-Term Capital Management had lost 350 million USD in a single day, and the cat was finally out of the bag.
The Hong Kong Stock Market and Hang Seng Index futures surged as if injected with some hormone. Countless funds bought indiscriminately, nearly doubling yesterday's trading volume. The Hang Seng Index soared 6.5%, closing at 7676 points.
"Long-Term Capital Management Nears Bankruptcy, Soros Suffers Major Defeat!"
"Shanhai Capital Proves Superior, Hong Kong Stock Market Turns Crisis into Safety!" (This one was paid for)
"Wall Street's Trillion-Dollar Market Affected, Financial Crisis May Spread Globally"
"Asian Financial Crisis Affects the Whole World!"
"Turning Point in the Hong Kong Battle, Wall Street Financial Crisis!"
Hong Kong newspapers and magazines all focused on this financial crisis that affected the entire Asia, especially now that a Wall Street star company like Long-Term Capital Management had suffered huge losses as predicted and expected, and was likely to go bankrupt.
It was as if Soros had been defeated by these media people, and everyone fell into a collective frenzy. In the capital market, policy guidance might rank first, second, or perhaps 1.5, followed by the amount of capital. No matter how talented a speculator, he will always be constrained by capital.
On August 20th, the Hong Kong Stock Market continued its sharp rise, directly breaking through 8000 points. When it crossed 8000 points for the second time, He Zhengcheng chose to close his positions. The final average closing price was around 7980, somewhat exceeding his expectations; this price was a bit high. It seemed that the Hong Kong Hang Seng Index futures market had been significantly influenced by him.
To summarize the profits from this round: in Dad's account, this profit was 7.4 million, totaling 11.5 million; in his own account, this profit exceeded 6.3 million, totaling 9 million.
After deducting the 1 million invested in Shanhai Capital, the more than 500,000 borrowed from friends, and setting aside some money for contingencies, his own account still had 7 million Hong Kong dollars remaining. The funds for USB drive research and development were finally available.
He had already received a call from Qian Yabo yesterday; her mentor was interested, and they could schedule a meeting to discuss details.
While organizing funds, he also planned for the future.
"Why did you leave today? The Hang Seng Index should be able to exceed 8000 points when the main futures contract settles. You'll suffer a big loss then!" Chao Yang said.
"How much do you want to win? How much do you want Soros and his group to lose?" He Zhengcheng's calmness at this moment came from the novels in his memory, and also from Bilibili UP hosts who said the Hang Seng Index did not break 8000 points. This time, because of He Zhengcheng's involvement, even if the Hang Seng Index might break 8000 points, it shouldn't exceed it by too much. Since there was a result, he could look for the reason. Therefore,
"Even if Soros lost this round of the battle, since 1997, the Hang Seng Index has fallen by over 10,000 points at its peak. How much profit did they make? Can you clearly state that?
Now, it's just a small give-back of their profits in Hong Kong.
The Long-Term Capital Management issue is not difficult to handle. The Federal Reserve will not let this company go bankrupt, and with Wall Street's strength, saving this company is easy. The Wall Street crisis is not as big as we imagine. You wouldn't deny this, right? This was the conclusion reached after everyone's discussion.
Therefore, I believe that with the current strength of the Hong Kong Monetary Authority, it is not enough to completely defeat Soros. I don't know how far this rally can go, but today's Hang Seng Index exceeding 8000 points has already surpassed my psychological expectation." He Zhengcheng said.
In fact, our protagonist made a slight mistake. Soros's short positions from last year could not have been held until now. If he was unlucky enough to invest his previous profits below 7000 to short Hong Kong, then he might have already lost his shirt.
"Perhaps you are right!" Chao Yang said. Today, the Hang Seng Index closed at 7855, falling 183 points from its high of 8038, even exceeding today's gain of 179 points. This is indeed worth noting.
Sure enough, in the evening, news broke that the Federal Reserve intended to rescue Long-Term Capital Management.
The unpredictability of the market lies precisely here: sometimes a seemingly insignificant piece of news can be exploited by capital.
On August 21st, Friday, the Hang Seng Index opened lower and continued to fall, eventually closing at 7463 points, down approximately 5% for the day. He Zhengcheng felt an urge to trade and bought 20 long contracts near 7400 points. I may not understand futures, but do I not understand trends?
There were still several trading days until the main futures contract delivery, and it was highly probable that the final price would still be close to 8000 points. Given this, he happily decided to make a small fluctuation trade and earn some pocket money.
After confirming that there were no important matters in the next two days and that the investor meeting would wait until next week, He Zhengcheng went home, also preparing for his meeting with the professor the next day.
"Making money, making money, today, today is truly, truly happy!" He Zhengcheng sang an unknown tune as he returned home.
"Dad, Mom, you're both here!" He Zhengcheng saw his parents when he got home. He had already informed them that this Hang Seng Index futures trade was over and there would be no more. He also used 6 million of the funds to buy shares in Lenovo, Hong Kong Telecom, and China Mobile respectively.
The NASDAQ internet bubble was about to begin, and it was obvious that mobile communication and computer stocks would surge. Unfortunately, there were no internet company stocks in Hong Kong; Li Ban Cheng's Tom company was just a scam.
"Dad, you can check the records of this trade yourself on the software, but it's best not to let anyone else know!" He Zhengcheng said.
His several trades involved shorting and taking profit at the lowest point, and buying long at the lowest point and selling near the highest point. If it were stock trading, he might have been invited for a cup of tea by the Hong Kong Independent Commission Against Corruption. Damn, it was too precise.
"I know, your Dad isn't stupid!" He Wenxuan knew the account password and had checked it several times. Showing this level of trading skill to others would lead to endless trouble.
"Also, I bought these three stocks. The market will be quite volatile recently. If you're not in a hurry to repay your 5 million, you can continue to buy these three stocks when they fall significantly. They should be profitable by the end of the year, and they can all be held long-term. If you have spare money, you can buy them anytime." He Zhengcheng said.
"Okay, I'll listen to you on all of this!" He Wenxuan said. He understood that his own level was limited, and it was better not to act on his own initiative.