Hong Kong 1980: The Savage Era

Chapter 388 389 [Stock Market Crash is Coming]

It's October.

Luo Qihong carried out a series of reductions in the equity of Federal Real Estate Company and China Entertainment Properties Company held by Dehe Real Estate Company, and maintained his shareholding in both companies at 37%.

As the Hang Seng Index rose to more than 3900 points, the best-case selling in the stock market allowed Dehe Real Estate Company to recover 13 billion yuan in cash. Combined with Luo Qihong's personal funds, it had a cash flow of more than 33 billion yuan.

Sufficient to cope with the upcoming large-scale privatization.

He will not be as stingy as Liu Luanxiong was when he privatized Chinese Estates Holdings in his previous life. He plans to offer a premium of 10% to 20% at a lower point so that shareholders will respond happily.

Because there is profit to be made in itself, it’s just a matter of sharing some of it with small shareholders.

The most difficult issue is the Kadoorie family's large hotel group. Up to now, Michael Kadoorie has not replied to Luo Qihong, as if his reply had fallen into the sea.

Luo Qihong's idea is very simple. He will also buy the stocks of large hotels at a lower point. He will buy as many as he can, even if it is a full acquisition.

Early October
Luo Qihong recovered the HK$15 billion that he had personally invested in the shares of Hong Kong Telecom Company.

When Hong Kong Telecom was first listed, its market value was HK$360 billion. Now it has risen to HK$733 billion, an increase of more than 100%. It is a very good investment project.

Luo Qihong holds a 4.17% stake in the telecommunications company, making him most likely the company's third largest shareholder, after Cable & Wireless and Hutchison Whampoa.

Based on the current market value, these shares are worth HK$30.54 billion.

So, Luo Qihong asked Dean Securities Investment Company and HSBC to help sell these stocks.

The value of this batch of stocks seems to be very high, but in fact, even if they are sold all at once, they may not cause much waves.

First, the current Hang Seng Index is as high as 3900 points, breaking the latest record. Second, as the second largest conglomerate in Hong Kong, the telecommunications company's stocks worth 30 billion yuan are just a drop in the bucket.

So it only took 10 days for this batch of stocks to be quietly digested by the stock market.

After deducting those expenses, a total of 24.07 billion yuan was recovered, with a net profit margin of 127%.

This was an investment project in early November last year, and only 11 months, less than a year, have passed.

Luo Qihong thought about using this money to leverage and short the Dow Jones Index. The profits would naturally be amazing, but it would involve great risks, as his position would be liquidated if the index rose by 5% to 10%.

He didn't quite remember the plummeting trajectory of the Dow Jones Index. If it did suddenly rebound, he would likely be in trouble, so he gave up the idea.

Monday, December 1987, 10
Wall Street was shrouded in dark clouds. The rapid and dull bells rang out, and the New York Stock Exchange began a new day of operation.

The atmosphere in the exchange was not as cheerful and cheerful as last week, but rather very depressing.

In just the first five minutes, the Dow Jones Industrial Average fell 5 points.

This seemed to be the last straw that broke the camel's back. In a blink of an eye, selling orders began to appear everywhere, and the screen was all red, without a single green wave.

At 10 o'clock in the morning Hong Kong time, the Hang Seng Index was initially affected by the New York stock market and fell 120 points in panic. By the time of the lunch break, it had fallen 235 points.

Luo Qihong was watching the TV broadcasting the latest stock market news, and suddenly he felt like money was raining from the sky. He was filling a snakeskin bag with money.

"Fortunately we evacuated quickly, otherwise my head would hurt now." Bai Jinyan took a deep breath. Although she had evacuated, the lingering fear was still scary. This time, she didn't know how many people jumped off the building.

"We are greedy when others are fearful." Luo Qihong smiled slightly, "What we need to do now is to consider when to buy at the bottom and privatize certain companies."

According to the plan, Zhaoan Real Estate Company needs to privatize two companies, Furama Hotel and China Resources Land, involving funds of about 15 billion yuan.

However, Zhaoan Real Estate Company has more funds on its books than this amount, and is fully capable of privatization and small-scale bottom-fishing operations.

"The company has a large amount of cash flow on its books. What are you going to do?" Although Bai Jinyan had discussed this matter with Luo Qihong, there would still be some changes.

"There is no rush now, but this stock market crash will not last too long, and its impact on the property market will be very limited, not as great as the property market situation in 82 and 83, so our focus is still on securities and stocks," said Luo Qihong.

After falling throughout the day on the 19th, the Hang Seng Index fell by 420.81 points to 3362.39 points.

International stock markets such as the U.S. stock market, the London stock market, and the Japanese stock market have all experienced astonishing declines.

Investors were wailing as they suffered heavy losses. What was despairing was that this was just the beginning and there would be even more terrible drops to come.

The next morning, the Hong Kong Stock Exchange announced that it would suspend trading for four consecutive days from the 20th to the 23rd to improve the settlement situation and allow investors to calm down.

This is not a trivial matter, and it is not something that the Chairman of the Hong Kong Stock Exchange, Li Fook-shun, can decide, so the Hong Kong government also expressed its absolute support for the suspension of trading.

However, this decision caused different opinions in the media, with some in favor and some against, and the opposition prevailed. Among them, Li Guobao, Li Fuzhao's nephew and general manager of Bank of East Asia, bluntly criticized the suspension of the market as a wrong decision that would easily cause greater losses.

Of course, Li Guobao’s remarks made the front-page headlines, making investors very pessimistic about the stock market situation four days later.

"There is a huge conflict in the Li family. Li Guobao is actually trying to sabotage them like this." Bai Jinyan walked back and forth while holding Luo Zhiying.

"If you come to work, leave your son to the nanny or to my mother." Luo Qihong said, "Don't let your subordinates think that we don't distinguish between public and private affairs."

Bai Jinyan smiled and said, "I see. De'an is a private company. How dare the employees say anything?"

Luo Qihong shook his head, somewhat helpless about Bai Jinyan's words, "The Li family has problems to begin with. Although Li Fuzhao is suspected of manipulating the stock market, Li Guobao and his people have always excluded him from the board of directors of Bank of East Asia. This is too outrageous."

"Only Li Fuzhao could endure for so long. If I had joined forces with Feng Bingfen to seize control of the Bank of East Asia, I wouldn't have let them be so comfortable."

"Li Fuzhao's character is not very good, but his investment vision in securities and stocks is not bad." Bai Jinyan put Luo Zhiying in the stroller and smiled with a dazzling motherly love. "The market will be closed for four days! Li Fuzhao's stupid move may cause huge trouble."

Luo Qihong laughed and said, "Those stockholders must be eager to eat Li Fuzhao. He should be more careful when he goes out next time, otherwise he will be pelted with stones or at least rotten eggs."

"Haha!! Then Li Fuzhao is dead." Bai Jinyan laughed loudly.

As a result, Luo Zhiying was awakened. The child's crying echoed in the office, and the two parents were busy.

Some employees even came in to help appease the prince of De'an Company when they saw the opportunity to show off.

The world became quiet until Luo Zhiying fell asleep after crying so much that she was tired.

(End of this chapter)