A century-old wealthy family that rose from Shanghai

The stock market frenzy of 1972 prompted the government to establish the Securities and Futures Commission to oversee the development of the securities market.

An interesting incident occurred when the Hong Kong government, in an effort to cool down the stock market, deployed personnel to guard the gates of the Far East Exchange under the pretext of the Fire Services Ordinance.

At that time, Far East was located in Chinatown, which was an old building with fire-fighting equipment that did not meet the standards.

It is clear that although the government was aware of the extent of the stock market frenzy, it lacked the legal authority to intervene. The government could only continuously advertise, urging investors to buy stocks that "could go up or down" and to be cautious when investing. However, investors only heard about the potential for stock price increases and paid no attention to the possibility of them "going down."

Although the industry was quite unhappy with the government's intervention, the Fire Services Department, as usual, notified the four exchanges to strictly comply with the relevant regulations and limit the number of visitors in order to comply with the building's escape route regulations.

Despite repeated government orders to curb the market's decline, the stock market finally saw a significant drop on January 12, falling 78.3 points in a single day. However, this result drew criticism from investors who felt that the government's measures were too drastic and too hasty, hindering the market's self-regulation.

In response to the dissatisfaction and complaints from some investors, the government explained that the measures were only intended to prevent speculative activities, and that normal buying and selling should not be affected.

On January 14, the government issued an internal notice prohibiting civil servants from privately trading stocks during office hours.

Just as the Hong Kong government was taking steps to ease the local stock market situation, the Chief Secretary also imposed a ban on government officials, prohibiting them from trading stocks during office hours. The ban notice was distributed to the heads of various government departments yesterday and includes the following: (i) prohibiting the use of telephones within government offices to trade stocks; and (ii) prohibiting officials from going to the stock market and brokerage firms to trade stocks without authorization during office hours.

On the other hand, under lobbying and urging from the China Securities Regulatory Commission (CSRC), the four stock exchanges finally agreed to suspend stock trading on Monday, Wednesday and Friday afternoons starting from January 22.

On the surface, the new measures are intended to give brokers enough time to process accumulated transactions, but in reality, they are intended to curb an overheated market atmosphere by shortening trading hours.

Although the government has tried to cool the stock market from different angles, the results do not appear to be significant.

On the 14th, the media reported that despite the Hong Kong government's efforts to use pressure to "cool down the stock market," citizens were full of confidence in Hong Kong's future and optimistic about the stock market. At the same time, a large amount of overseas funds flowed into Hong Kong in search of outlets, causing the stock market, which had just fallen, to rebound quickly.

Due to the heated market atmosphere and the fact that many legitimate brokerage firms were packed with customers, some "illegal" brokerage shops specializing in "fractional shares" (i.e., brokerages not listed on the four exchanges) have emerged in the Mong Kok area of ​​Kowloon, making the already overhyped stock market even more complicated.

The newspaper described these newly emerging "illegal" brokerage shops as follows: "(These shops) have sprung up like mushrooms after rain, one every five steps, (the situation) is like buying lottery tickets."

In fact, from any perspective, at this point, most citizens' stock trading behavior has become like gambling, which has basically deviated from the normal operation of the stock market and is very likely to affect social stability and financial order.

Business leaders including Chan Kwong-leung and Sanders have issued warnings in newspapers; and Governor Murray MacLehose has also issued warnings in the media.

However, these comments only served as a minor deterrent, and the next day everyone forgot about them, even blaming the person who made the comments for meddling.

Of course, Chen Guangliang was just being polite and didn't expect the already frenzied stock market investors to listen. Instead, he began to sell his investments one after another.

This round of 'global stock market crash + oil crisis' will cause the Chen family's wealth to increase exponentially afterward.

The week before the New Year.

As Chen Guangliang entered the Cheung Kong headquarters office building in the Poly Plaza, his keen ears caught the sounds of employees discussing stocks, but he didn't make a sound.

In March, Chen Guang considered introducing some 'company regulations' in several group office buildings to save some employees who were speculating in stocks; after all, internal instability also affects the company's development.

Just like why the Hong Kong government suppresses the stock market, it is because it is afraid that too much stock market volatility will cause social instability.

morning.

Chen Wenjie accompanied his father to the archives of CK Asset Holdings Limited. When he saw his father holding a photo from the early days of CK Asset Holdings Limited, he said, "Office work was really simple back then."

Chen Guangliang laughed and said, "This is hardly an office. The land was the first piece of land I bought back then. The building was just made of bricks, without any planning. To put it bluntly, it's just for shelter from the wind and rain. There are only three employees: me, Guo Deming, and Lu Yuantai."

Chen Wenjie said, "Uncle Guo retired from his position as vice president of Cheung Kong Industrial Group this year. His two sons and two daughters are all doing well overseas, and he said he also plans to retire overseas. Uncle Lu retired from his position as general manager of Poly Construction in the late 1960s. His eldest son, Xiaoqing, is the head of real estate at Cheung Kong Holdings, and his second son, Lu Xiaoming, runs his own construction company. We at Cheung Kong Holdings also have cooperation with them. I finalized the deal several times, but Xiaoqing was very careful to avoid any appearance of impropriety."

He was saying this to show that his father was a man of great loyalty and affection. It is said that when his father came to Hong Kong, he took seven or eight hundred subordinates with him, including seven or eight hundred families. As soon as these families arrived in Hong Kong, they were provided with housing and quickly assigned to new positions.

As Chen Guangliang listened to his son's explanation, he carefully placed the photos into a professional safe and then said, "Speaking of these things, I'm starting to miss my old buddies!"

Chen Wenjie immediately said, "Why don't we take advantage of your 63rd birthday and invite these old friends and their families to a gathering at the Shangri-La Hotel? They might want to talk to you too."

He knew that his father had only celebrated his birthday seriously once, which was his 60th birthday. Because his grandmother was still alive, his father was a bit superstitious, and every year on her birthday, his children and grandchildren could not gather together.

Upon hearing this suggestion, Chen Guangliang happily exclaimed, "That's a great suggestion!"

"Okay, then I'll have Uncle Guo and the others organize it later!"

"Okay, they won't be allowed to give gifts."

"Yes, I will definitely tell."

February 3, 1973, was the first day of the Lunar New Year. This year happens to be the "Year of the Ox" in the Chinese calendar.

Because the "Year of the Ox" coincides with the "bull market" in stock market terminology, some investors even wishfully believe it to be a "good omen," which has fueled even more speculative activity.

A report from the Oriental Daily News pointed out even more thoroughly that society has fallen into a situation where "everyone is into stocks." Whether they are housewives, working class, white-collar workers or businessmen, they all "talk about stocks with joy" and "are keen on stock trading."

On Wednesday, February 7th, the Lunar New Year holiday ended, and the market reopened for the Year of the Ox with a resounding success. The speed and strength of the market were astonishing. Indices and stock prices rose sharply, reaching new highs one after another.

CK Asset Holdings Limited.

At the board meeting, Chen Guangliang presided over the discussion on dividend distribution.

"Given last year's outstanding performance, CK Asset Holdings will implement a large dividend this year. The specific plan is to pay a final dividend of HK$2.25 per share and issue 1 bonus share for every 5 shares held. At the same time, given that CK Asset Holdings' share price is too high, I suggest splitting each large share into 10 smaller shares to improve the liquidity of the stock."

Currently, the share price of CK Asset Holdings is HK$45, which is equivalent to a 5% dividend payout per share. CK Asset Holdings usually pays dividends twice a year, so the annual dividend is significantly higher than bank interest rates.

The directors present applauded. In fact, they were mostly their own people. There were only three real external directors, and the other six were all their own people.

At this time, Cheung Kong's total share capital was just over 6000 million shares, and its market value was approaching 30 billion. With this stock split, the market value will inevitably exceed 30 billion, and it is even possible that it will reach 40 billion.

I agree.

"I approve." The vote was unanimously passed.

Over the next two days, CK Asset Holdings released its results and dividend report on Thursday, distributing HK$1.35 million in dividends. Coupled with the positive news of a large-cap stock split, the Ping An Index surged 120 points that day.
On Friday, HSBC issued a final dividend of HK$3.75 per share and a bonus share issue of 1 for every 5 shares held. The bank also decided on a stock split – splitting each large share into 10 smaller shares to improve stock liquidity. The Ping An Index surged 150 points that day.

By the close of trading on Friday (February 2.9), the Ping An Index had risen to 1730 points, with a weekly gain of over 20%.

The market has gone completely mad.

Two days later (February 2.12), the Ping An Index broke through the psychological threshold of 1800 points, closing at 1802 points.

Securities regulator Shih Wei-hsien would say with a hint of disdain, "If you just put a dog on the stock market, many people will buy its shares."

Two days later (February 14), the United States announced that it would devalue the dollar by 2%. Although the Hong Kong government stated that it would maintain the Hong Kong dollar exchange rate unchanged, the stock market only declined slightly.

Subsequently, investor sentiment was once again boosted as the Hong Kong government announced plans to build an underground railway to improve the overburdened transportation system.

It’s Spring Again (1973).

At the beginning of March, Chen Guangliang walked into the office building of Cheung Kong Holdings and heard people talking about stocks. This time, he did not ignore them, but walked towards the employees who were talking.

The employees were immediately startled. They were slacking off at work and talking about the stock market. Had the boss overheard them? The thought sent a chill down their spines. The boss was known for being very serious and strict.

Chen Guangliang walked up to several high-level white-collar workers in Central and said, "Talking about stocks at work, I think that's the prevailing social trend now. In my opinion, you're all on the verge of disaster without realizing it. The bigger the soap bubble, the easier it is to burst."

Everyone stared at the boss, their faces showing surprise and complicated expressions.

Chen Guangliang didn't waste any more words. Instead, he turned around and went back to his office, where he called Chen Wenjie over.

"dad"

"Immediately issue an internal notice to all employees, prohibiting them from trading stocks during work hours. We recommend that all stock holdings be cleared and that everyone focus on their work. We also warn everyone that the bubble in the stock market is getting bigger and bigger and could burst at any time. We suggest that everyone seriously consider returning to work."

Chen Wenjie quickly replied, "Okay, I'll arrange it right away."

At this point, they had already cashed out their shares for two months. Although they would continue to cash out for the remaining month, it wouldn't have much of an impact.

The father issued this notice to prevent his colleagues from going down a path of no return due to stock speculation, which would also affect the group's operations.

Soon, Cheung Kong Holdings, Global Holdings, Cheung Kong Industries, and Ping An Financial Group all issued the same internal document, and almost every employee in the office building received a copy.

The internal document was signed by Mr. Chen Guangliang, the group's "spiritual pillar".

"No stock trading or discussion is allowed during work hours. Violators will be severely punished!"

"The soap suds are getting bigger and bigger; there's always the possibility of finding treasure!"

"I suggest everyone carefully consider investing; returning to work is the right path."

Global Group.

After seeing the internal document, thirty-year-old Tan Guoshi looked around and whispered to his colleague Tang Shunbo, "Abo, it's an internal document from Chen Shengfa."

Tang Shunbo said solemnly, "Yes, Chen Sheng rarely worries about these things. This time, he issued an internal document, and I heard that everyone has one. It seems that the matter is very serious."

Tan Guoshi said suspiciously, "Do you think the boss is unhappy because he sees us talking about stocks at work, so he's trying to scare us?"

Tang Shunbo retorted angrily, "Don't be ungrateful, kid. I think Chen Sheng is definitely doing this for our own good. You know who he is; he was known as the 'Gold King' back in Shanghai, and he's very good at finance. Anyway, I'll start selling stocks next Monday. Whatever, I'll just take the profits!"

Tan Guoshi blushed slightly and said, "But I only entered the market at the beginning of this year, and I've only made about 70 or 80% of my investment. How could I have made several times more than you!"

Tang Shunbo looked at Tan Guoshi and advised, "Listen to Chen Sheng. Besides, if you keep bringing up stocks at work, you might lose your job!"

"Oh"

For a time, employees of the four major groups began to consider cashing out and leaving the market. Of course, 30% of stock traders were hoping for a lucky break, and a very few even resigned to trade stocks because of this internal document.

March 9, 1973 (Friday) was an ordinary and simple day. There were no particularly sensational positive news or significant capital inflows. However, the Ping An Index soared to a historical high of 2174.96 points due to excessive market speculation, with a single-day trading volume of 7.59 million yuan, which made many stock investors extremely excited.

Unfortunately, on the next trading day (Monday, March 12), the stock market began to decline after three fake shares of Hopewell Holdings Limited were discovered, triggering wave after wave of selling.

At the opening bell in the morning, the prices of various stocks were still quite impressive. However, this momentum was short-lived, and soon it was hit by huge selling pressure, causing the prices of various stocks to fall back.

According to sources within the stock market, the main reason for the market downturn was the tightening of lending to brokers by banks. At the same time, short sellers also took advantage of the situation, contributing to yesterday's weak market performance.

March 15. Oriental Daily News commented: The discovery of a few fake stock certificates caused a continuous drop in stock prices, which shows that the Hong Kong stock market is inherently fragile and cannot withstand the slightest disturbance... Recently, the stock market has been frenzied, with almost everyone scrambling to apply for (subscribe to) and buy and sell stocks. Their motivation is mostly not investment to preserve value, but speculation in pursuit of huge profits... Anyone with a clear mind would feel that this situation harbors great danger.

Subsequently, the stock market remained weak and continued to fall rapidly. Due to the reversal in sentiment, some investors suffered huge losses because they were unable to exit in time.

Regarding this situation, the newspaper reported: "The stock market has been falling sharply for several days... Many stockholders are extremely anxious and terrified in the face of this dismal downturn, and are terrified of even mentioning it" (Oriental Daily News, March 23, 1973).

However, it can be said that the "big market crash" in early March was just the prelude to this huge disaster; the real "chaos and fear" were yet to come. Those speculators who refused to "cut their losses and leave the market" at this time, or even those who tried to "buy low during the market crash," suffered huge losses as a result.

On March 26, another stock market crash quietly arrived. On that day, the Ping An Index fell from 1617.98 points to 1439.28 points, a drop of 188.70 points in a single day, a decline of more than 3%, which greatly shocked the market.

Whether it was someone with ulterior motives stirring things up, or some genuinely "good friends" who believed the "market crash" was just a technical adjustment, a small number of market participants at the time pointed out that "the stock market will soon stop falling and rebound," and therefore suggested "buying on dips" (Oriental Daily News, March 26, 1973).

Unfortunately, this overly optimistic prediction led to an increasingly rapid and deep decline in the stock market due to the pressure of continuous selling by major investors.

In fact, in the early stages of the stock market's decline from its highs, not only were some market participants convinced it was merely a technical adjustment, but the Hong Kong government also considered it a short-term phenomenon. Therefore, instead of intervening, the Inland Revenue Department published an advertisement on April 4th stating that "profits from stock trading are subject to taxation," planning to levy taxes on stock investors. This news further fueled panic among investors, exacerbating the market sell-off. (End of Chapter)