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

Chapter 94 Zhang Yang's Ultimate Trump Card

Chancheng, eastern Guangdong.

Main urban area.

Looking at the limit-up price of Jianfeng Group, Liao Guopei's breathing became rapid, and he couldn't help but sigh that even God was helping them to rise.

The news spread over the weekend, giving shikimic acid and H1N1 influenza unprecedented exposure and attention.

Jianfeng Group even issued an announcement claiming that its subsidiary, "Jianfeng Natural Products," had improved the patent for "Extraction Technology of Star Anise and Shikimic Acid," and intended to use the trend to boost its stock price.

Liao Guopei also analyzed the fundamentals of this stock. Although it is an old stock that was listed in 1993, it is not controlled by the market and the shares are basically dispersed in the hands of retail investors.

How can you tell if a stock is being manipulated?
First, look at historical price increases.

Second, look at the number of shareholders.

Since its listing in 1993, Jianfeng Group has experienced three significant price increases: in 1997, 2000, and 2007. During these three major upward phases, there was clear manipulation by the market maker, with significantly increased trading volume and a surge in the number of retail investors.

After the violent surge in 2007, the number of shareholders increased dramatically from 65666 in the semi-annual report to 82451 in the third quarter report.

Where did the 16785 newly added retail shareholders get their shares?
Without a doubt, it can only be that the big players are selling off their shares, and then retail investors are buying them up.

According to the first quarter report of 2009, the share capital of Jianfeng Group was 3.3 million shares. The number of shareholders decreased by more than 1000, but there were still 8. In addition, the top ten shareholders held 62% of the circulating shares. That is to say, the remaining 8 shareholders held 1.254 million shares, which averaged 1567 shares per person.

With an average holding of 1567 shares, there is basically no controlling shareholder; there are only a large number of trapped investors and some speculative funds.

After two years of adjustment, it's actually very simple to shake out the trapped positions above; all you need to do is give it a pullback to the daily limit down to force out some of them.

According to "retail investor psychology," retail investor investment generally goes through three stages.

1 represents profit.

2 means breaking even.

3 represents a discount.

When retail investors first buy stocks, they are determined not to sell and will buy more as the price drops.

However, as the stock price continued to fall, retail investors' mentality shifted from making a profit to breaking even. As long as they broke even, they would be eager to sell their shares.

If, based on this, the market breaks out of its sideways consolidation trend, and after a long period of persistent and gradual decline, retail investors who see no hope of recovering their losses will change their mindset and be willing to leave the market if they only hope to recover 70% or 60% of their losses.

Besides eroding retail investors' confidence, sideways trading also allows for day trading to reduce holding costs.

Only when costs are low enough will speculative funds and major investors drive up prices to attract new retail investors to take over, and releasing the trapped positions above is a side effect of the price increase.

Understanding how to read the psychology of retail investors is the first step to becoming a speculative investor.

However, Liao Guopei, Zhang Yang, and other speculative funds dare not follow the downward trend now. In addition to fearing the intervention of Xu Xiang and others, market sentiment and capital have provided strong support.

……

Hongyue Building, Hangzhou.

Office of the Vice President.

Sitting in a black upholstered leather chair, Zhang Yang stared intently at the screen, mouse in hand.

5月11日的上证指数开盘点位是2646.29，上个交易日收盘点位是2625.65，20.64的数差，呈现了0.786%涨幅的跳空高开。

Given the nature of A-shares, a gap-up opening often leads to a pullback, a phenomenon known in the market as "filling the gap."

However, as of 9:45 a.m., Zhang Yang did not see any signs of a pullback. The banking and financial sectors were showing strong upward momentum, releasing one-third of the previous trading day's trading volume in just 15 minutes, perhaps driven by the positive impact of the "CEPA Framework Supplementary Agreement VI".

The overall market rally is actually not conducive to the emergence of speculative stocks.

Because the market is generally rising and there is a strong profit-making effect, market funds do not need to stick together and tend to be more dispersed.

However, if the market falls across the board and the sentiment of losing money spreads, market funds often choose to follow the trend and stick together, which can easily lead to the emergence of speculative stocks.

However, it is worth mentioning that the shikimic acid concept and the vaccine sector, along with the medical sector, have all performed very strongly.

Stocks such as Rhine Biologics, Jianfeng Group, Liaocheng Chengda, Progen Pharmaceuticals, and Neptunus Biotech all hit their daily limit.

Among them, Rhine Biologics and Jianfeng Group were the fastest to hit the daily limit.

The market now knows that Rhine Biologics is a stock manipulated by Xu Xiang, while Jianfeng Group is the true leader in shikimic acid production. Both have their own advantages and are points of contention for capital investment.

Take Rhine Biologics as an example. Although it has insufficient shikimic acid production capacity, it is a stock driven by speculative investors such as Xu Xiang and Sun Guodong, which has the characteristics of "passing the buck and taking shortcuts".

This is similar to a Ponzi scheme. The earliest investors can not only get their principal back but also receive a large return, but the later investors basically lose everything.

"Let's lock up some of the funds first."

After observing the market for another 10 minutes, I noticed that Zhang Yang, who had strong support below, had begun to slowly sell off his holdings, with each transaction consisting of 500 lots.

Is he going to cash out his profits?

Actually not.

Because Zhang Yang and Liao Guopei have relatively small capital, in order to withstand the potential sell-off by speculative funds such as Xu Xiang and Sun Guodong, they must make good use of retail investors' funds and use them to build a wall for themselves.

How can we utilize retail investor funds?

T+1 rule!

As is well known, A-shares operate on a T+1 trading model, meaning that stocks bought on a given day can only be sold the following day.

Now that Zhang Yang is selling shares of Jianfeng Group, once retail investors choose to buy them, according to the T+1 trading rule, these shares cannot be sold again within the current trading day, and the retail investors' funds are essentially locked up.

In contrast, Zhang Yang could use the funds he received from selling his shares to repurchase shares of Peak Group or other companies on the same trading day.

This approach has the advantage of ensuring sufficient cash reserves while also locking in stocks of corresponding value.

……

After selling 20 shares at the latest price of 6.45 yuan, netting 129 million yuan, Zhang Yang sent a message to Liao Guopei.

[joker]: I sold 20 shares and cashed out 129 million. I still have 53 shares. How are things going for you?
Not a moment.

Liao Guopei also replied to the message.

[Zen City Shadowless Kick]: I sold 100 million shares and still have 400 million shares in hand. I wonder when Xu Xiang will dump them.

As a second-tier speculative investor, he also understood the importance of appropriately reducing his holdings.

The two have sold a total of 120 million shares, cashing out 774 million yuan. Regardless of whether the buyers of these shares were retail investors or speculative funds, these 120 million shares cannot be traded again within today's trading day. This is what small funds can do in the face of a possible market crash.

[joker]: Did he call you?

[Zen City Shadowless Kick]: 20 minutes ago, Sun Guodong called me 5 times in a row. I put the phone on silent mode and didn't answer.

[joker]: That should be soon.

[Zen City Shadowless Kick]: Should I sell some more stocks? I don't have enough cash on hand, less than 20 million left. If the board is broken, it could easily cause panic.

[joker]: It's not good to sell too much. The Peak Group is in a mess right now. We don't want to get shaken out. Besides, if Xu Xiang and his group wait until tomorrow to dump their shares, the situation will be even more unfavorable for us.

[Zen City Shadowless Kick]: Indeed. After a brief discussion with Liao Guopei, Zhang Yang switched to Huaxin Securities' fund recommendation page. The three new funds prominently featured as "Today's Highlights" were…

1. Fullgoal Tianli Growth Bond A
2. Yinhua Mixed Growth C
3. Huaxia Medical Value Hybrid A
Click on "Huaxia Healthcare Value Hybrid A" to see the fund manager's profile at a glance.

Tao Yuang, male, Chinese national, is an outstanding graduate of Shanghai University of Finance and Economics. He has 11 years of experience in the securities industry and previously served as a fund manager, market analyst, and financial observer at Huaxin Securities Shanghai Branch. He is nominated to serve as the fund manager of Huaxia Medical Value Hybrid Investment Fund starting from April 30, 2009.

Looking at the Huaxia Medical Value Hybrid A fund, which was only 4% away from closing for subscription, Zhang Yang muttered to himself, "It's finally about to close for subscription. I can't let anything go wrong."

When he learned that Tao Yuang was going to move into fund management, he had already taken this into account. This is Zhang Yang's real trump card in daring to "intercept the dragon".

He knew very well that Tao Yuang urgently needed an opportunity to prove himself to his superiors, and also needed a direction for fund investment.

Infrastructure?

Entering the market too late carries too much risk.

car?

Arrived too late, too ordinary.

Only funds focusing on the H1N1 flu concept, which hasn't been hyped yet and has a global spread trend, can capitalize on short-term trends and meet Tao Yuang's performance requirements for quick results.

In two market research reports published in April, Zhang Yang pointed out the spread of the H1N1 flu and included several potential stocks, among which Jianfeng Group was included. He was betting that the other party would enhance his image through the medical sector.

As expected, "Huaxia Medical Value Hybrid A" was launched, raising 20 billion yuan. The investment philosophy in the portfolio mentioned the words "H1N1 influenza". It was these words that made Tao Yuang's fund recognized by the market, and many cooperative sales channels are promoting his medical fund.

Public funds like these tend to invest in market capitalization and performance leaders. Few fund managers chase hot stocks in the market unless they want "fund investors" to take over the losses so they can profit privately.

After the subscription period ends, the fund will be established within 7 days, and then enter a closed period. During the closed period, the fund manager will use the funds raised to invest in stocks in relevant sectors.

However, to find out the top ten holdings, you need to wait for the fund's quarterly, semi-annual, and annual reports, following the same process as listed companies' performance disclosures.

It's worth mentioning that listed companies' performance can be leaked in advance, allowing funds to rush in, and the leakage of fund holdings is even more serious.

Where there are people, there are interpersonal relationships; where there are interpersonal relationships, there will be exchanges of interests.

As of now, Zhang Yang has a firm grasp on Tao Yuang, Liao Guopei, Xu Xiang, market sentiment, and the development of events.

……

And at the same time.

the other side.

Jiangsu and Zhejiang Ningbo.

Galaxy Securities Jiefang South Road Branch.

After realizing he had been tricked by Liao Guopei, Ma Xinqi immediately contacted his former speculative investor friends and successfully borrowed 500 million yuan worth of shares in Jianfeng Group, but this was far from enough.

Given Liao Guopei's financial resources, they would need to possess 1 million yuan worth of stocks to cause the other party's stock to collapse.

Because of the lack of prior planning and the highly dispersed nature of Jianfeng Group's shares, speculative investors such as Sun Guodong and Miao Weize from the Ningbo Daredevil Team have made high-profile moves to buy shares, clearly intending to drive down Jianfeng Group's stock price and consolidate Rhine Biologics' leading position.

Xu Xiang didn't sit idle either. He contacted a vice president of Jianfeng Group and drove directly to discuss the matter with him.

The Ningbo Daredevils made a huge move; within half an hour, inside information spread across the internet.

This was intentional on their part, with the aim of forcing out retail investors' shares in Jianfeng Group. The number of retail investors holding these shares was too large, and they had to be forced to sell at a loss.

At this time, in the comment section under the Eastmoney forum and Jianfeng Group's forum, retail investors holding shares began to waver.

[Little Egg]: There are rumors that Xu Xiang and Sun Guodong are going to destroy Jianfeng Group, and the Ningbo Daredevils are furious. What do you all think?
[Air Force Fishing Guy]: I saw it too. There's a lot of talk about it in the chat groups. To be on the safe side, I've already sold. The return from the two consecutive limit-up days allowed me to successfully break even.

[World's Number One Melon]: I also sold. This stock had trapped me for two years, and I've finally broken even. I really don't dare to continue holding it.

[Loves Chicken Feet Tendons]: Seriously? You guys have all sold off your stocks? I just bought some and I can't sell them until tomorrow.

The emergence of short market posts has shaken out some weak hands.

Anyone who has studied the psychology of retail investors knows that retail investors who have been trapped for two years or more have basically lost the idea of ​​making a profit and only want to get their money back as soon as possible and run away.

This is like a 16 or 17-year-old boy who thinks that as long as he works hard, he can earn millions a year, live in a duplex villa, and have a beautiful and virtuous wife.

Once teenagers reach the age of 25 or older, they gradually come to realize the harshness of reality.

Earning a million a year?

An annual income of 20 is enough.

Living in a big villa?

I'm content with having my own house.

Time will smooth out the rough edges. Retail investors who are trapped are like young people with high spirits, which are gradually worn down until they only think about breaking even.

……

While two speculative investors, Jianfeng Group and Rhine Biologics, were secretly vying for dominance, the "real man" era of A-shares came to an end.

At 11:04 AM, the banking sector, which had risen for five consecutive days, took the lead in a pullback, experiencing a sharp decline in the morning session of the sixth trading day.

China Construction Bank closed at 4.71 yuan on the previous trading day. Today, it gapped down by 0.04 yuan to open at 4.75 yuan, and reached a high of 4.85 yuan.

However, at 11:04, it pulled back to the opening price of 4.71 yuan, with a fluctuation of 2.89%. This led to a large number of profit-taking, resulting in a sell-off at 11:19, with the stock price falling to 4.67 yuan, a drop of 1.68%, and it continued to decline.

The successive pullbacks in bank stocks have dampened the upward momentum in the securities sector, with a large number of profit-takers eager to cash in.

As of May 11, the market had risen for five consecutive days. Profit-taking was like a balloon about to be inflated; any slight disturbance could trigger it to burst, potentially leading to a stampede of cashing out.

What is a cash-out stampede?

To put it simply, retail investors and institutional investors saw that the market might be about to correct, so they all sold off their holdings at the buy price.

If too much money is cashed out, and the number of buy orders is insufficient, the order will be pushed to the next buy order.

Let's say that 10 yuan is the buy order 1 with 500 lots, 9.9 yuan is the buy order 2 with 1000 lots, and 9.8 yuan is the buy order 3 with 2000 lots.

大量获利资金兑现，买1的500手挂单数量不够，9.9元的买2挂单顺势成为买1挂单，如果买2还不能承接卖单，那么9.8元的买3将成为买1挂单。

Once a large amount of capital is cashed out, the market can plummet very quickly.

The market correction in A-shares is actually welcomed by Zhang Yang, Liao Guopei, Xu Xiang, and Sun Guodong, because when the market is in a bad state, funds are more willing to chase short-term hot spots.

But to everyone's surprise, at 11:28, near the end of the morning session, notifications of unusual fund movements suddenly flooded the screen.

[Stock Anomaly Alert]: Hualan Biological has received a super buy order, amounting to 800 million.

[Stock Anomaly Alert]: Hualan Biological has received a super buy order, amounting to 1200 million.

[Stock Anomaly Alert]: Hualan Biological has received a super buy order, amounting to 1400 million.

The sudden influx of large sums of money caused Hualan Biological, which had been sluggish, to surge, with its stock price rising from 2.73% to the daily limit, and 1 lots were bought to lock in the limit.

A short market commentary followed closely behind, targeting a top-tier speculative investor—Zhang Mengzhu!

(End of this chapter)