Hong Kong 1980: The Savage Era

Chapter 559-561 [Disarray after the crisis]

The owner of Citybus is Xu Zhandong, who owns companies in the paint, real estate, hotel and other businesses. He has two listed companies with a combined market value of HK$50 billion at its peak, but now it is only around HK$30 billion.

The decline in market value is not fatal. What is important is that before the financial crisis, its listed companies borrowed heavily to invest in properties. Now that the properties have depreciated, they must make up for this part of the loss, otherwise they may face bankruptcy.

Now, the most valuable things in Xu Zhantang's hands are the shares of Citybus and the antiques in his hands, which he has no choice but to sell in order to save the listed company.

Citybus operates a complex number of routes, including the core areas of Hong Kong Island, Kowloon City, the Airport Express, and the New Territories. It also owns a number of parking lots, which are not valuable now but will be priceless in the future.

Citybus also has considerable profits, otherwise Xu Zhandong would not have held on to Citybus for so many years.

Luo Qihong believes that if there is an opportunity to integrate Hong Kong's transportation industry, it can still become a small support point for the family, and an annual profit of HK$2 million from the bus business will not be a problem.

No matter how small a mosquito is, it is still meat, and a steady supply of meat.

Luo Qihong did not want to acquire Peregrine International. The company had been messed up by Du Huilian and others and had a lot of bad debts. According to reliable sources, Peregrine International had nearly $10 billion in bad debts, and $3 to 4 million in cash might not be able to save it.

You have to know that this is a period of financial crisis. Few wealthy people can even come up with $10 million in cash, let alone $2 billion.

However, Luo Qihong was very interested in Liang Botao and could help him manage some of the business of the Bank of Bahrain and be responsible for work in a certain region.

Mid to late November.

After a month, Luo Qihong had finished all the miscellaneous affairs of his company.

The market value of Siu On Properties Ltd. rebounded to its peak of HK$800 billion, and Asia Securities Ltd. also recovered its market value to HK$140 billion. As for other companies, their market values ​​fell by 5% to 12%.

However, compared with other blue-chip stocks, it is better, not falling as much, and has even recovered slightly.

As long as the international speculators delay their return, perhaps the company's market value will be able to recover to the peak level in 97.

Real estate has started to fall, but the drop is not high, only 10% to 20% for now. The market activity is extremely poor, and the market is flooded with various properties being sold at low prices, but unfortunately no one is bidding to buy them.

The media knew that Zhaoan Group held a large amount of Hong Kong dollar cash, so they asked Luo Qihong to purchase these properties to help the citizens relieve their debt difficulties.

Luo Qihong decisively refused because those people were speculators. Ordinary citizens could not even afford to buy one house, let alone several residences. Moreover, Zhaoan Group was a company, not a charity. It had no responsibility or obligation to pay for anyone's investment mistakes.

His fellow journalists all laughed at him for being too naive. Hong Kong is an economic society where interests, not personal relationships, matter.

Luo Qihong also said that international speculators will come to Hong Kong again, and Zhaoan Group needs sufficient funds to deal with the upcoming crisis.

This statement caused quite a stir.

In fact, the upper and middle class citizens are aware of this fact, but more of the lower class citizens do not have this kind of judgment and analysis. They think that if they have defeated the international speculators, they will not come again.

As a result, the Hang Seng Index fell by more than 120 points the next day, and many citizens sold their stocks that they had "bottom-fished".

The situation in South Korea was dire: in mid-November, the won abandoned its fixed exchange rate against the U.S. dollar, and then the won exchange rate plummeted, depreciating by 11% in just one week.

International speculators were very ruthless and took away half of the achievements made by the Koreans over decades. Many Korean chaebols had difficulty in cash turnover, and companies such as Haitian, Sammi, and Jinro went bankrupt one after another.

Six of the top 30 chaebols collapsed, and Koreans began to doubt whether Samsung, Hyundai, and Daewoo could survive. By early December, South Korea could no longer sustain itself and had to seek help from the IMF, which completely opened up the country's financial sector.

Luo Qihong earned US$6 million as he wished, but he did not transfer the money into his account in Hong Kong, but instead kept it in an international account.

With the remaining capital, Luo Qihong notified York, the president of Hengan Investment Company, and asked him to start buying shares of the top five chaebols including Samsung, and at the same time send people to the board of directors of related companies.

In the office, Luo Qihong was reading newspapers. The contents were basically the same, 'such and such company went bankrupt, such and such employee jumped off a building, such and such country introduced a new monetary policy, etc.'

The impact of the Asian financial crisis was so great that it affected the entire world, and the crisis has not yet ended, it has just been slowed down.

"Boss, Mr. Liang wants to see you!" The secretary knocked on the door and walked to the desk.

"Let him in." He had already made an appointment with Liang Botao, so it was not without an appointment.

Liang Botao was very anxious and stated his purpose without any politeness, "Mr. Luo, Peregrine may announce liquidation, so I came to your place to think of a solution."

"How much do you want?" Luo Qihong didn't beat around the bush.

In fact, the top management of Peregrine has approached many people, but they were all powerless. Only a foreign financial group expressed its willingness to help, but unfortunately it turned out to be a bluff by the American foundation. Peregrine is in a really difficult situation now.

Liang Botao briefly explained the situation, which was similar to what Luo Qihong knew, that there were $10 billion in bad debts.

"It's already insolvent. We're all friends, so I'll tell you the truth. You can't save Peregrine. If you insist on saving it, you will be personally heavily in debt, and Peregrine will still be liquidated." Luo Qihong said seriously, "Botao, you should think about yourself and your family."

At its peak, the market value of Peregrine International was HK$120 billion, but now it has fallen by 8%. It should be one of the stocks with the worst decline in Hong Kong.

Liang Botao thought for a while and responded, "How does Luo Sheng want to deal with Du Huilian and others?"

Luo Qihong waved his hand and said, "No need to beg for mercy. Someone must be held responsible for this matter. We are friends, so you can be exempted. I will ask the legal team to hold Du Huilian and others accountable, but as long as they can make up for the losses, the matter will not be investigated further."

"Okay. Then I will be your subordinate from now on." Liang Botao knew very well that he couldn't even protect himself now and couldn't help his old friend, so this was the only thing he could do.

In fact, Peregrine International still has its merits. This company has contracted 80% of the underwriting of red chip stocks in the mainland, and it also has a relatively strong presence in Southeast Asia, which can assist the family in completing its expansion.

In addition, Peregrine International has acquired many high-quality real estate companies. The market value of its properties was HK$34 billion at its peak, and may appreciate to HK$50 billion in the future.

On the afternoon of the fourth day, Barings Bank and Peregrine International announced that Barings Bank had invested US$4 million and acquired a 3.3% stake.

Many people in Hong Kong and Kowloon knew that Peregrine was about to go bankrupt, but they did not expect that Luo Qihong would choose to intervene and directly inject more than 3 million US dollars. It was really "inhumane".

However, some people do not find it strange. Liang Botao and Luo Qihong knew each other before they became rich, and they have a close friendship. As long as Liang Botao comes to him for help, Luo Qihong will definitely give him face.

Luo Qihong seems to be overbearing, but in fact he is also a man of worldly wisdom. However, there are only a handful of people who can be so considerate to him.

Then, Zhaoan Group announced another piece of news, spending HK$6.1 million to acquire 46% of the shares of City Bus Company held by the Xu Zhandong family.

However, this did not stir up much public opinion, because there were rumors in the market that international speculators were about to return to Hong Kong, scaring investors into turning pale.

(End of this chapter)