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

Wang Jianguo sat in his office in the Renmin University School of Finance and Economics office building.

He had his phone lying in front of him, and the screen showed his chat history with Zhou Xingbang.

He stared at the sentence "Do you think Hong Kong is still the Hong Kong before 1997?" for a long time.

Then he picked up the landline on the table and dialed a number.

"Hello, it's me. Could you check if there's any negative news about Huaxin Taifu recently? Yes, the Rong family one. Okay, send it to me when you find it."

After hanging up the phone, he leaned back in his chair and rubbed his temples.

It's not that he doesn't understand finance.

He's been in this industry for thirty years and has seen it all.

But this was the first time he had ever seen a student use more than 20 million Hong Kong dollars in short positions to bet on the decline of a wealthy company's stock price.

If you win, that's a skill.

If we lose...

He didn't want to think about it anymore.

A moment later, my phone vibrated; it was a message from my assistant:

"Director Wang, we found out that Huaxin Taifu has an iron ore project in Australia, and the investment scale is very large."

The Australian dollar has depreciated by more than 30% this year, and there have been persistent rumors in the market that they might suffer exchange rate losses, but the company has not responded directly.

Wang Jianguo stared at the message in silence for a long time.

Then he sent Zhou Xingbang a message:

"Old Zhou, tell your student to be careful; not every stock can be shorted so easily."

Zhou Xingbang replied quickly: "He knows."

Wang Jianguo looked at those two words and gave a wry smile.

He knew, he knew everything.

5 PM, China World Trade Center.

Lin Zhengmao sat in his office, with Lu Chenzhou's complete trading records for the day spread out in front of him.

Li Mingyang stood to the side, holding a mobile phone with a screenshot of a post from Baidu Tieba on the screen.

"Chief Lin, take a look at this. He's shorting CEFC China Energy."

Lin Zhengmao took the phone, glanced at it, and then handed it back to Li Mingyang.

"What do you think?" he asked.

Li Mingyang thought for a moment: "Huaxin Pacific's Australian project does indeed have exchange rate risks. The Australian dollar has fallen by 30% this year. If their financing is denominated in US dollars or Hong Kong dollars, the exchange rate losses could be substantial, but..."

"But what?"

"But that's the Rong family's company; no one dares to leave it empty."

Lin Zhengmao nodded: "So he's free."

He stood up, walked to the window, and turned his back to Li Mingyang.

"Do you know what the hardest thing is in this market?"

Li Mingyang thought for a moment: "Did you guess the right direction?"

"No, the hardest part is that you move first when everyone else is too afraid to move."

He walked back to his seat, sat down, and turned on his computer.

"Could you please retrieve CEFC China Energy's semi-annual report for me? I need to see the details of their Australian projects."

"Now?"

"Now."

Li Mingyang responded and turned to leave.

"etc."

Li Mingyang stopped.

Lin Zhengmao looked at him: "Why do you think he would swindle Huaxin Taifu?"

Li Mingyang thought for a moment: "Because of exchange rate risk?"

Lin Zhengmao shook his head: "Exchange rate risk is an open secret, everyone knows it. What he's shorting isn't exchange rate risk, he's shorting the fact that nobody dares to short it."

Li Mingyang was stunned for a moment.

Lin Zhengmao continued, "When everyone knows there is a risk, but no one dares to take action, the first person to act will earn supernormal profits because countless others will follow suit."

He paused for a moment: "When he said 'waiting for someone to carry our sedan chair,' he was probably referring to these people."

Li Mingyang fell silent.

"Go retrieve the data," Lin Zhengmao waved his hand.

5:30 p.m., Central, Hong Kong.

Wei Zhexuan sat in his office, with Hong Kong stock market closing data in front of him.

Cheng Jiajun pushed open the door and came in, holding a printed copy of the transaction record in his hand.

"Boss, the guy you asked me to keep an eye on shorted three stocks this afternoon."

Wei Zhexuan took the few pages of paper and glanced at them.

BYD Electronics, China National Building Materials, and Huaxin Pacific.

His gaze lingered on the three characters "Huaxin Taifu" for a moment.

"Did he empty the Rong family's company?"

"Yes, HK$2273 million, cost price of HK$23.15, closing price of HK$22.65, unrealized profit of HK$50."

Wei Zhexuan placed the paper on the table, leaned back in his chair, and remained silent.

Cheng Jiajun waited a while, and seeing that he didn't react, he cautiously asked, "Boss, don't you find it strange?"

"What's strange?"

"That's the Rong family's company. In Hong Kong, no one dares to openly short the Rong family's stock."

Wei Zhexuan glanced at him: "So he's free."

Cheng Jiajun was stunned for a moment.

Wei Zhexuan stood up, walked to the window, and looked at Victoria Harbour.

Do you know how many years I worked at Goldman Sachs?

"Twenty years?"

"In the past twenty years, I have seen countless people want to short Huaxin Taifu, but in the end none of them did it, not because they couldn't do the math, but because they didn't dare."

He turned around and said, "But today, a college student from mainland China went all in on shorting at 22.50."

Cheng Jiajun didn't know what to say.

Wei Zhexuan walked back to his seat, picked up the transaction record, and looked at it again.

"He also said something today."

"What did you say?"

"Do you think Hong Kong is still the Hong Kong before 1997?"

Cheng Jiajun was silent for a moment, then asked, "Should we follow suit?"

This scene is not only happening at CICC and Goldman Sachs, but also at domestic and international giants such as Morgan Stanley, UBS, and Cathay.

On October 3rd, many people came to Room 608 of the Science Park after hearing about it, and the corridors were packed with people.

Everyone whispered among themselves, glancing occasionally at the tall, thin man in front of the computer.

"Futures prices rose slightly, suggesting a possible higher opening, but the Dow Jones Industrial Average fell 3.22% overnight, indicating fragile market sentiment. It's uncertain what the Hong Kong stock market will do today."

"What else could be happening? The FTSE 100 in London is down 1.9%, the DAX in Frankfurt is down 2.51%, the CAC 40 in Paris is down 2.25%, and the Hang Seng Index in Hong Kong has already fallen 2 points in pre-market trading. I don't even want to think about it after the market opens."

"I heard that everyone in the financial industry is paying attention to Huaxin Taifu today. Is that true?"

"Seriously, almost everyone in the Asian financial circle is paying attention. They can't ignore it! Someone actually dared to short a behemoth like CEFC China Energy. Who wouldn't want to see a good show?"

"Look at Lu Chenzhou, he really looks calm, it doesn't seem like he's faking it. I really can't figure out who gave him the guts to short Huaxin Taifu?"

"The way to be a general is to first cultivate one's mind. One must remain calm even if Mount Tai collapses before you, and not even blink if a deer runs past on your left. Only then can you control advantages and disadvantages and be ready to face the enemy. Lu Chenzhou is born with a big heart; he's made for this job."

"For two years, Lu Chenzhou kept a low profile. But after that salon, he really made a name for himself. It was terrifying."

"Yes! I still remember the salon on the night of September 17th. Lu Chenzhou stood up and said that now was a good time to buy at the bottom. Zhao Xianglong wentaded him, and he replied that he would buy. In just 16 days, he turned 10,000 yuan into more than 80 million yuan."

"16 days! Over 8000 times! Those who invested in him are making a fortune. Although they joined later, they invested a total of HK$150 million. Based on yesterday's closing net asset value of HK$9079 million, that's a 60.5-fold, 61-fold return! It's terrifying!"

"It really proves the saying that the bold get rich while the timid starve, and leverage can produce miracles."

"Then why do you think Lu Chenzhou didn't use leverage this time?"

"This is short selling. Short selling with leverage is not worthwhile; the risk far outweighs the reward. And look at the stocks he's shorting—China National Building Material and BYD Electronics aside, what about CEFC China Energy?! He actually dared to short CEFC China Energy!"

"Yes! Everyone in the market knows that Huaxintai has problems, but no one dares to short it. But Lu Chenzhou dares to. He's really fearless, like a newborn calf that's not afraid of tigers! He's too fierce!"

"Do you think the Rong family of Huaxin Pacific might resort to underhanded tactics to sabotage Lu Chenzhou?"

"What's going on? Everyone in the market is watching, and Lu Chenzhou hasn't leveraged his position; he only has HK$2273 million in short positions, which means he's on guard."

"The market has opened! The market has opened! BYD Electronics opened at 4.40, down 2.22%; China National Building Materials opened at 9.19, down 2.44%; and Huaxin Taifu opened at 22.30, down 1.55%."

The students who had invested were overjoyed to see the opening price; Brother Lu was right after all.