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

Lin Zhengmao did not answer directly, but walked to the whiteboard, picked up a marker, and wrote a few lines:

Hang Seng Index: 18000 points (32000 points last year)

Hang Seng China Enterprises Index: 9000 points (20000 points last year)

AH premium index: 148 (historical high)

Average price-to-book ratio of Hong Kong stocks: 0.92 times (lowest since 1998)

He put down his pen and turned around: "The current valuation of Hong Kong stocks is the lowest level since the Asian financial crisis."

The share prices of many mainland companies have fallen below their net asset value.

The same company sells for 10 yuan in the A-share market, but only 5 yuan in the Hong Kong stock market.

He paused, then looked around the room. "Do you think this is an opportunity?"

The meeting room was silent for a few seconds.

Li Mingyang spoke first: "But Chief Lin, Lehman Brothers just collapsed, global financial institutions are deleveraging, and foreign capital is dumping stocks. Isn't it too early to buy at the bottom now?"

Lin Zhengmao nodded: "You're right, the macro environment is indeed not good."

But you should know that the market never bottoms out until the macro environment improves.

The market bottoms out at its most pessimistic point.

Wang Siyuan hesitated and asked, "So you mean this student's judgment is correct?"

Lin Zhengmao did not answer directly, but said, "I don't know if his judgment is right or wrong, but I do know that he did something that many people dare not do: he was greedy when everyone was fearful."

He walked back to his desk, sat down, and opened the Reuters terminal on his computer: "Moreover, he chose Hong Kong stocks."

This shows that he is not blindly following the rebound of A-shares, but is looking for undervalued opportunities.

This ability to think independently is more noteworthy than his trading skills.

Li Mingyang and Wang Siyuan exchanged a glance but neither spoke.

Lin Zhengmao typed a few keys, and a string of Hong Kong stock codes appeared on the screen.

"If he were to leverage tenfold to go long on Hong Kong stocks, what stock would he most likely choose?" he muttered to himself, as if asking himself, or perhaps asking the two people in the room.

Li Mingyang thought for a moment: "I heard it's BYD."

Wang Siyuan shook his head: "BYD was dumped by foreign capital from 77 yuan to more than 7 yuan. Going in now is like catching a falling knife."

Lin Zhengmao didn't speak, but stared at the K-line chart on the screen, lost in thought.

Li Mingyang asked curiously, "Chief Lin, do you think he's a good candidate?"

Lin Zhengmao nodded: "A student who can leverage ten times to buy at the bottom of a bear market and hold on to it deserves praise."

He glanced at the clock on the wall; it was almost eleven o'clock.

"That's enough for tonight. Tomorrow, I need to know where his funds are going."

"Yes." Li Mingyang and Wang Siyuan nodded at the same time.

Lin Zhengmao pushed open the door and walked out; the sound of his leather shoes gradually faded into the distance in the corridor.

Li Mingyang and Wang Siyuan exchanged a glance, both seeing a complex emotion in each other's eyes.

2 Queen's Road Central, Central, Hong Kong, Cheung Kong Centre.

The lights in the building were sparse, but the floor where Goldman Sachs' Asian headquarters was located was brightly lit.

This is the tenth day since Lehman Brothers went bankrupt. For Goldman Sachs, these ten days have felt like a decade.

Since Lehman Brothers collapsed, the market has been speculating every day about "who will be next".

On September 17, the Federal Reserve was forced to intervene to rescue AIG, injecting $85 billion into the market.

On September 20, Goldman Sachs and Morgan Stanley announced their transformation into bank holding companies, subject to stricter regulations.

The era of investment banking on Wall Street collapsed within a week.

A team of a dozen people sat here, with six Bloomberg terminals in front of them, their screens displaying real-time data on global markets.

The leader was Wei Zhexuan, the 45-year-old head of Goldman Sachs' Asian equity trading department. He was from Hong Kong, a graduate of Princeton University, and had worked at Goldman Sachs for 20 years.

Half of his hair had turned gray; in the past ten days, the other half had turned gray from being frightened by Lehman.

"Boss, here's what you wanted." A young analyst jogged over, holding a stack of printed A4 papers.

Wei Zhexuan took the stack of papers, which contained screenshots of posts from Tsinghua University's BBS and chat logs from Renmin University's QQ group.

Beside it was a summary hastily written in pencil:

Lu Chenzhou is a third-year student at the School of Finance and Economics, Renmin University of China.

September 19: I used 60 times leverage to buy CITIC Securities shares at the bottom. My principal was 10,000 yuan, and I borrowed 590,000 yuan by mortgaging my student ID and national ID card. Currently, I have a floating profit of 297974 yuan.

September 23: Public fundraising was held in the dormitory building of Renmin University, but it was stopped by the university that evening. It is rumored that the amount of funds raised was about 300,000 to 500,000 yuan.

September 25 (today): Announced in the investment group that I plan to invest in Hong Kong stocks with 9x leverage, limited to existing clients only.

Wei Zhexuan finished flipping through these pages, his expression remaining unchanged.

He has seen too many stories of retail investors making money in bull markets and losing it all in bear markets; the script is always the same.

He placed the paper on the table, his tone flat: "So what? A college student planning to invest several hundred thousand RMB in Hong Kong stocks—is that something worth holding a meeting about?"

"Boss, it's not just a matter of a few hundred thousand," a man in his early thirties said.

His name is Cheng Jiajun, a China strategy analyst at Goldman Sachs Asia. He has a bachelor's degree from Fudan University and an MBA from Harvard University. He is the person on the team who understands the Chinese market best.

"Look here." Cheng Jiajun pointed to a sentence in a BBS post, a quote from Lu Chenzhou that had been posted online by a student who had attended the class:

"Valuation, policy, cycle, human nature—this is the bottom, a once-in-a-lifetime opportunity to buy at the bottom."

Wei Zhexuan frowned.

Cheng Jiajun continued, "This person's timing in the A-share market last Friday was very precise."

Before the three major positive developments were announced, he bought in at the daily limit down price with a leverage of 60 times.

This isn't retail investor behavior; this is institutional-level judgment.

"Maybe it's just luck," Wei Zhexuan said dismissively.

Cheng Jiajun did not refute: "Perhaps, but what if his judgment on Hong Kong stocks is also correct?"

Wei Zhexuan was silent for a few seconds. They had made a fortune by shorting Hong Kong stocks recently.

If Hong Kong stocks are to rebound...

"What are you trying to say?"

Cheng Jiajun took a deep breath: "I'm thinking, should we consider closing out a portion of our positions?"

Wei Zhexuan looked at him incredulously: "You think a college student can see things we can't?"

Cheng Jiajun fell silent.

Wei Zhexuan turned around and faced the entire team: "What are our clients, those hedge funds, pension funds, and sovereign wealth funds that manage tens of billions of dollars, doing?"

They are reducing their holdings, cashing out, and withdrawing funds from Asia; they are frantically shorting global stock markets.

This is the trend.

A student investing hundreds of thousands of RMB in Hong Kong stocks won't change anything.

Cheng Jiajun looked at the stack of information about Lu Chenzhou in his hand, and then read through what the student had said at the salon:

"Valuation, policy, cycle, human nature—this is the bottom, a once-in-a-lifetime opportunity to buy at the bottom."

In Hong Kong in September 2008, this statement sounded like a crazy thing to say.

But Cheng Jiajun remembered something.

During the SARS outbreak in 2003, the Hong Kong stock market plummeted to 8400 points, and everyone felt that the world was ending.

But some people bought stocks at that time and tripled their money two years later.

That person was Wei Zhexuan.

The logic behind Wei Zhexuan's purchase back then is almost exactly the same as what Lu Chenzhou is saying today.

Valuations are low enough, policies are shifting, cycles will repeat, but human nature remains unchanged.

Cheng Jiajun glanced at Wei Zhexuan, then at the screenshot of Lu Chenzhou's QQ group on the screen.

These two people, one is forty-five years old and the other is twenty years old.

One had worked at Goldman Sachs for twenty years, while the other was a student who hadn't even graduated yet.

They live in completely different worlds, but their judgments about the market are surprisingly consistent.

This reminded him of a saying: There is nothing new in the market, only human nature repeating itself.

However, some people get old.