Starting with a fully invested A-share portfolio to become a capital...

Chapter 62: Margin Trading Account Now Open

Friday, January 4th.

Unlike the sell-off in the banking sector on the 23rd, this morning, as soon as the market opened, Huaxin Securities, a leading securities stock, began to sell off.

The stock opened at 25.4 yuan, but within 10 minutes it dropped to 24.62 yuan, a decline of 3.07%, dragging down other securities stocks as well.

The securities sector, once touted as the "bellwether of the bull market," is declining, and the banking sector, once touted as the "stabilizing force," has failed to recover. This is destined to be a bloodbath.

After experiencing a limit-down yesterday, Zhang Yang specifically researched what happened to ST Zhongfangji and actually found the reason for the decline.

It turns out that 8 PM on April 24th was the time when ST Zhongfangji was to release its first-quarter report, and some funds were rushing to exit the company.

The recent surge in ST Zhongfangji's stock price is entirely due to the recovery in manufacturing PMI data, coupled with its status as a leading textile machinery manufacturer. This does not necessarily indicate a recovery in its performance.

When the market opened 4.21% higher, Zhang Yang immediately sold all his shares, not bothering to gamble on the quality of the first quarterly report that evening.

He invested a total of 2 yuan in ST Zhongfangji stock and made a profit of 4351.79 yuan, with a total increase of 21.76%.

Unlike the sluggish performance of the banking sector and the sharp decline in the securities sector, the coal sector, which Zhang Yang had previously predicted, is now seeing its leading stock, Huaguo Shenhua, continue its upward trend, rising by 3.63%.

Yangtze Power was not to be outdone, with a surge of 7.63%, more than doubling in volume.

Zhang Yang initially bought Huaguo Shenhua and Yangtze Power because he anticipated a correction in the banking sector, which could drag the overall market down. Therefore, he bought into resource-based sectors like coal and electricity.

In the A-share market, investing solely based on performance is not feasible, but investing without considering performance is simply playing with your own money.

Because performance is the support level, a stock with good performance cannot fall indefinitely.

For example, Yangtze Power's net profit in the first quarter of 2009 was 8.378 million yuan, compared to 2.516 million yuan in the first quarter of 2008, representing a year-on-year increase of 232.98%.

With this level of performance growth, which major player would dare to dump their shares?

If an institution were to actually drive down the stock price, retail investors would be willing to go all in against the major players, without any hesitation.

I sold ST Zhongfangji in the morning session and cleared out my positions in Yangtze Power and Huaguo Shenhua in the afternoon session. I made a profit of 4351.79 yuan and 6201.34 yuan on the first two stocks, but lost 646.23 yuan on Shenhua. The profit after clearing out my positions was 9906.9 yuan.

At this time, Zhang Yang's securities account had a total of 19.84 yuan.

As for the bank card, Lai Weijie paid off the remaining 4 yuan, received 1.17 yuan from the research report, and then Zhang Yang withdrew 2 yuan to He Jing, meaning that there was still 3.174 yuan left in the bank card.

With 19.84 yuan in his securities account and the money in his bank card, Zhang Yang currently has a total of 23 yuan.

Without hesitation, he chose to transfer his securities certificate to a bank account.

Because he didn't buy reverse repurchase agreements for treasury bonds yesterday, Zhang Yang was able to withdraw the 8.8 yuan he had been using to buy reverse repurchase agreements.

[尊敬的客户，您尾号2389的建行账户于2009年4月24号15点04分证转银存入华国币198442元（大写：拾玖万捌仟肆佰肆拾贰元整)转账汇款，可用余额230192元。]
Before the bank closed, after withdrawing the money from his securities account, Zhang Yang hurriedly went to the China Construction Bank branch on Wudong Road to transfer funds to the account specified in the contract.

……

After receiving the payment receipt, Zhang Yang took a picture and sent it to Zhang Xiaolong's QQ account, and then called him.

"Dudu-"

After a few busy tones, the call was connected.

"Hey, Junior Brother Zhang."

"Brother Zhang, I've transferred the money. I've also sent you a photo of the large transfer receipt to your QQ account. Please take a look."

"Hold on."

A few clicks of a mouse came from the other end of the phone. Zhang Xiaolong quickly said, "I see, junior brother. I'm submitting your margin trading information. Your trading manager will contact you shortly. Please answer the phone." "Okay."

The two hung up the phone.

Not a moment.

Trading manager Zhong Qifeng called.

"Hello Mr. Zhang, Manager Zhang has just processed your 5x leverage financing, which, together with your margin, totals 1 million yuan. Next Monday, the trading day, I will be online from 9:00 AM to 3:00 PM. You can call this number anytime to trade stocks."

"So fast."

Zhang Yang was amazed by the other party's speed, but worried about the daily interest on his leveraged account, so he asked, "There's no charge this weekend, right?"

The daily interest is over two hundred yuan, so two days would be over four hundred yuan. If there's a fee for that, he'll have to have a serious talk about it.

“Of course we won’t accept it.” Zhong Qifeng smiled calmly and continued, “The leveraged funds will only take effect starting next week.”

"Okay, I'll contact you next week."

"I'll contact you next week."

The two then hung up the phone.

Zhang Yang, who was still working at the China Construction Bank, stood up from the bench. By this time, the funds he had been managing had increased to 100 million yuan.

If you go all in, a 1% increase is 1 yuan, and a limit-up is 10 yuan. Compared to operating with 20 yuan, the speed at which you make money and lose money will increase significantly.

At this moment, Zhang Yang had only one thought: to aggressively invest in A-shares, first accumulate his own capital, and then withdraw his high-risk off-exchange margin financing.

……

Over the following weekend, the capital market also saw a lot of news.

At the macro level: On April 25, the WHO declared the H1N1 influenza outbreak in Mexico and the United States a "Public Health Emergency of International Concern".

The sudden outbreak of influenza has sparked heated discussions on the internet, with many people expressing concerns about the economic recovery. Goldman Sachs has downgraded the investment priority of sectors such as aviation, tourism, and consumer goods.

On April 26, the 4th Central China Investment and Trade Expo International Financial Forum was held in Luzhou, Anhui Province, focusing on financial cooperation and development under the global financial crisis.

On the same day, April 26, the two sides of the Taiwan Strait signed the "Financial Cooperation Agreement," which covers regulatory cooperation in the banking, securities and futures, and insurance industries, as well as cooperation in currency management, such as cash exchange and clearing mechanisms.

Regarding individual stocks: On April 25, Zhongxi Pharmaceutical issued several announcements, including the termination of its stock listing, the reduction of its stake in Kangdaer, and the share swap merger with Hudu Pharmaceutical.

On April 26, due to losses for two consecutive years in 2008 and 2009, the Shenzhen Stock Exchange issued a delisting risk warning for Boying Investment, and its stock abbreviation was changed to ST Boying.

It is also worth mentioning that although the news of Minmindong (Huaying Technology)’s share reform and restructuring had already attracted market attention on April 9, discussions about its subsequent progress continued to heat up on the 25th and 26th.

Because Zhang Yang leveraged his investment five times, he had to ensure that he could make a stable profit.

The unfolding market news led him to see several potential sectors, such as pharmaceuticals, banking, insurance, and investment in central China.

As for Minmindong, a hot stock in the market, he chose not to look into it.

The reason is simple: using 5x leverage to speculate on market hotspots can lead to a margin call in the blink of an eye.

Zhang Yang only makes money that is visible, such as the "Financial Cooperation Agreement" recently signed between the two sides of the Taiwan Strait, which may drive A-shares to rise further, because this is a real boon for banks and securities.

If both the banking and securities sectors start operating simultaneously, the market performance in the coming week shouldn't be too bad.

(End of this chapter)