Becoming the King of Bottom Fishing After Going All-In on A-Shares

Chapter 117 Short Selling Report

The message was sent out of room 608 before 5 p.m.

It's unclear who sent the message first, or which group it was posted in, but within half an hour, the entire financial community knew that Xia Yaozong had lost 635 million yuan in trading.

The first group to explode was the Renmin University alumni group.

"Have you heard? Xia Yaozong lost 635 million yuan trading today."

"Really? Isn't Lu Chenzhou in charge?"

"No, it was Xia Yaozong who suggested becoming a trader. Lu Chenzhou let him try, but after losing 635 million, he stood up, pushed the keyboard back, and said that he should sit in this position."

"Damn, this guy is something else. He lost over 600 million and immediately backed down, quitting."

"This isn't admitting defeat; it's knowing your own limitations."

"Yes, if you know it won't work, then quit. That's a million times better than those who stubbornly persist."

"What was Lu Chenzhou's reaction?"

"She didn't say anything, just looked at him and asked, 'Have you thought it through?' Xia Yaozong said he had, and then that was it."

"These two people are both incredibly calm."

When the news reached the girls' dormitory, Xiao Zhou poked her head out of her bed: "Zhiyu, I heard Xia Yaozong said he's quitting?"

Wen Zhiyu put down her bag and sat down on the edge of the bed.

"Um."

"Isn't he a rich kid? His family is so wealthy, why would he quit after losing over 600 million?"

Wen Zhiyu thought for a while.

"He didn't quit because he was losing money; he realized he wasn't up to the task and needed to regroup."

"How did you find out?"

"When placing the order, his mind was blank. He said he could only think about one thing, but trading involves many things happening at the same time, and he couldn't keep up."

Xiao Zhou remained silent for a while.

"This person is quite clear-headed."

"Yes, he knew he couldn't do it, so he accepted it and didn't force himself to."

When the news reached the research department of CICC in the China World Trade Center, Lin Zhengmao was just about to leave.

Li Mingyang knocked on the door and came in: "Chief Lin, regarding Lu Chenzhou, Xia Yaozong lost 635 million in trading today."

Lin Zhengmao raised his head and remained silent for a few seconds.

"This guy is something else. He lost over 600 million, realized his incompetence on the spot, and admitted it immediately. He didn't make excuses, shirk responsibility, or try to tough it out. That's better than many people who have been in the market for decades."

He paused for a moment: "Some people lose money their whole lives and never realize they're incapable. They only need to lose once to know."

Li Mingyang thought for a moment: "What about Galaxy Entertainment and SJM Holdings?"

"Lu Chenzhou will take action himself. Keep an eye on things tomorrow."

The news reached Goldman Sachs' Asia headquarters in Central, Hong Kong, at 7 p.m.

Cheng Jiajun walked into Wei Zhexuan's office with his phone in his hand.

"Boss, Lu Chenzhou's side, Xia Yaozong lost 635 million in trading today."

Wei Zhexuan took the phone and glanced at the screenshot of Chenzhou Capital's holdings details.

He frowned slightly. Reducing his holdings in China Shenhua was within expectations, given the large proportion of his portfolio that needed adjustment.

However, buying Galaxy Entertainment and SJM Holdings is quite interesting.

Galaxy Entertainment's stock price has shrunk by 90% from its peak, falling to around HK$0.6.

SJM Holdings' share price fell below its IPO price immediately upon listing, eventually dropping to around HK$1.4.

The decline was due to a variety of factors, including systemic risks, short selling by hedge funds, bearish reports from investment banks, deteriorating fundamentals in Macau, tightening policies, margin calls on Accumulators, and panic selling by retail investors.

All these forces combined to create an unstoppable downward trend.

Of course, the main reason is that they short sell.

Tiger Asia Investments, JPMorgan Chase, Morgan Stanley, Goldman Sachs, UBS, Bank of America, Royal Bank of Scotland, and others.

Each of these companies has made a fortune from the decline in Macau gaming license stocks over the past few months.

Now, Lu Chenzhou has entered the market and is going long.

Should we teach him a lesson?

Wei Zhexuan leaned back in his chair, his fingers tapping lightly on the table.

He recalled the last surprise inspection by the China Securities Regulatory Commission.

That morning, officials from the Hong Kong Securities and Futures Commission suddenly appeared at the entrance of Goldman Sachs' trading room, demanding to submit all documents related to short selling transactions. It wasn't a formal meeting; it was a surprise inspection.

The market exploded the moment the news broke.

The Hang Seng Index was pulled up from below 11000 points to 12596 points in one day, a gain of 1600 points, or 14.35%.

Foreign banks that had previously engaged in aggressive short selling began frantically liquidating their positions in response to regulatory investigations.

Buy stocks to close out your short positions.

That time, Lu Chenzhou earned 3.53 million.

Direct action is definitely not an option; the China Securities Regulatory Commission is watching.

But if you secretly put in a little effort, it shouldn't be a problem.

Wei Zhexuan handed the phone back to Cheng Jiajun, his voice calm.

"Go and release a short-selling report to make Lu Chenzhou lose more money."

Cheng Jiajun paused for a moment, then nodded.

He turned and walked out, but another thought was swirling in his mind.

He originally planned to buy it following Lu Chenzhou's lead.

Galaxy Entertainment at 0.64 and SJM Holdings at 1.40 are indeed not expensive in the long run.

But now that Wei Zhexuan is about to release a short-selling report, these two stocks will most likely fall tomorrow.

Should I wait a little longer?

He pushed open the office door, stood in the corridor for a few seconds, then took out his phone, scrolled to Lu Chenzhou's stock holdings screenshot, and looked at it again.

Galaxy Entertainment: 4000 million shares, cost 0.765, current price 0.64, unrealized loss of 500 million.

SJM Holdings: 625 million shares, cost 1.616, current price 1.40, unrealized loss of 135 million.

He stared at the two lines of numbers for a long time before putting his phone back in his pocket.

hold on.

I'll see about it tomorrow.

At the same time, at Morgan Stanley's Asian headquarters.

Richard Gray sat in his office, with Sunken Ship Capital's trading records laid out in front of him.

The assistant stood beside him, speaking in a very low voice.

"Boss, Lu Chenzhou bought Galaxy Entertainment and SJM Holdings today, for a total of over HK$4000 million."

Gray stared at the two lines of numbers and remained silent for a few seconds.

"He's buying up Macau gaming license stocks at rock-bottom prices."

"Yes, but both stocks fell back by the close of trading today, and his unrealized loss is about HK$635 million."

Gray picked up his coffee and took a sip.

"635 million is nothing to him."

"Should we...?"

"Release the report." Gray put down his coffee cup. "Tomorrow morning, issue a short-selling report, cutting the target price below 0.5."

The assistant nodded and turned to leave.

"Wait," Gray called out to him.

The assistant stopped.

Gray tapped his fingers lightly on the table a few times.

"Have the trading desk prepare for tomorrow's opening. If Galaxy Entertainment and SJM Holdings rebound, add some short positions. Not too many, so as not to attract attention."

"clear."

The assistant pushed open the door and left.

Gray leaned back in his chair, staring at the ceiling.

Lu Chenzhou.

He remembered that name.

Tiger Asia Fund, 8 PM.

BillHwang sat in front of his computer, the screen displaying candlestick charts for Galaxy Entertainment and SJM Holdings.

He's been watching for ten minutes now.

The analyst stood to the side, holding a newly compiled report.

"BilI, Lu Chenzhou bought Galaxy Entertainment and SJM Holdings today, totaling about HK$4000 million. The average cost price was HK$0.765 for Galaxy and HK$1.616 for SJM. The closing price showed a floating loss of HK$635 million."

BillHwang remained silent.

The analyst continued, "Goldman Sachs and Morgan Stanley are preparing short-selling reports tonight, which will be released first thing tomorrow morning."

BillHwang tapped his finger lightly on the table.

"And what about us?"

"What do you mean?"

"Send it," Bill Hwang said. "Cut the target price down to 0.4, and give a more comprehensive reason: cash flow, project funding gap, policy risks, macroeconomic downturn, write everything you can."

The analyst nodded and turned to leave.

"etc."

The analyst paused.

BilIHwang stared at the monthly candlestick chart of Galaxy Entertainment on the screen, which had fallen from its 2007 high to 0.6, a drop of more than 90%.

"What's his logic in buying this?"

The analyst paused for a moment, then asked, "You mean Lu Chenzhou?"

"Um.

""

The analyst thought for a moment: "It could be due to the relaxation of gambling policies in Macau, or it could be due to the economic recovery. But the current data shows that gaming revenue fell by 10% quarter-on-quarter in the third quarter, and tax revenue dropped by 25% in October. Policies are still tightening, and the market is not optimistic at all."

BillHwang remained silent for a few seconds.

"That's betting on the cycle."

He paused for a moment, then said, "Let's release the report! Let the market crash a bit more, and once it can't hold on any longer, we'll consider whether to follow suit."

The news reached JPMorgan Chase at 9 p.m.

The head of research for the Asia region was working overtime when his assistant pushed open the door and placed a printed trading record on the table.

"Lu Chenzhou bought Galaxy Entertainment and SJM Holdings today."

The supervisor picked up the record and glanced at it.

"What about Goldman Sachs and Morgan Stanley?"

"They're all preparing short-selling reports. They'll be released first thing tomorrow morning."

The supervisor thought about it.

"We'll issue one too. We'll cut our target price to 0.45."

He paused for a moment, then said, "Tell the trading desk to add a few short positions tomorrow, but not too many. Just follow the market."

That night, foreign institutions in Central, Hong Kong, took action almost simultaneously.

Goldman Sachs, Morgan Stanley, Tiger Asia, JPMorgan Chase... every firm is preparing short-selling reports.

It wasn't because they were afraid of Lu Chenzhou.

It's because they were already bearish on Macau gaming license stocks.

Lu Chenzhou's purchase only gave them another reason to issue a report.

Construction on Sands has ceased.

The policy has been tightened.

Gambling revenue has declined.

Tax revenue has decreased.

All the data points in the same direction—down.

They shorted the market and made money for several months.

Now some people want to go long.

Let him do it.

The market will teach him a lesson.

November 4th, Tuesday, 6:30 AM.

Lu Chenzhou opened his eyes, picked up his phone, and saw that US stocks had fallen for three consecutive days overnight.

He glanced at it for a few seconds, put down his phone, and got up to wash up.

7:15, West Gate of Renmin University.

Wen Zhiyu was already waiting. She handed over the insulated bag, which Lu Chenzhou took, opened, and took a sip of porridge.

"All institutions are issuing short-selling reports," Wen Zhiyu said. Her voice was tighter than usual, like a taut string.

"Um."

"Ten companies."

"Um.

""

Aren't you worried?

Lu Chenzhou glanced at her: "It's only a few tens of millions, nothing to worry about."

Wen Zhiyu was momentarily speechless, her lips moved but she didn't say anything more.

The two walked side by side toward the science park.

7:50, Room 608.

Zhang Yixing was already in front of the computer. His eyes were dark circles, clearly he hadn't slept well.

A thick stack of printed research reports lay spread out on the table: Goldman Sachs, Morgan Stanley, Tiger Asia, JPMorgan Chase, UBS, Citigroup, Deutsche Bank, HSBC, Merrill Lynch, and Nomura. Ten firms, all represented.

"Hang Seng Index futures opened 2.5% lower," Zhang Yixing said. "Galaxy Entertainment is at 0.58 pre-market, and SJM Holdings is at 1.30 pre-market."

Lu Chenzhou sat down and turned on his computer.

At eight o'clock sharp, Xia Yaozong pushed open the door and came in.

He was holding a cup of soy milk in his hand, his face expressionless.

I walked to my usual spot by the window, took out my phone, and started scrolling.

At 8:15, room 608 was packed with more people than yesterday.

Once the news got out, ten institutions simultaneously issued short-selling reports, targeting Galaxy Entertainment and SJM Holdings.

Some people came to watch the spectacle, some to see how Lu Chenzhou would respond, and some were waiting to see him lose money.

Wen Zhiyu stood by the window and opened her notebook.

Hong Kong stocks opened at 9:30 a.m.

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