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

3 PM, Room 608, Renmin University Cultural and Technological Park.

Lu Chenzhou pushed the door open and entered. Xia Yaozong was sleeping on the table, and Zhang Yixing was watching a video with headphones on.

When Zhang Yixing saw him, he took off his headphones and asked, "You're back?"

Xia Yaozong was awakened by the noise and looked up: "Sinking Boat?"

Lu Chenzhou placed the license documents on the table.

Zhang Yixing picked it up and glanced at it: "Transfer the money next week?"

"Um."

"Transfer to the Hong Kong company account?"

"Um."

"and then?"

"Then wait, wait for Huaxin Pacific and China National Building Material to continue to fall, and when they reach their bottom, close your positions."

Zhang Yixing looked at him, remained silent for a few seconds, and then said, "You planned everything step by step in advance."

Lu Chenzhou did not respond.

Xia Yaozong leaned against the window and suddenly asked, "The company is registered, the license is obtained, and the funds are in compliance with regulations. When do you plan to raise funds?"

"Wait until this wave is finished."

"What about the entry requirements?"

Starting from HK$100 million.

"So what have you been doing all this time?"

"Watch the market and wait."

At 7 p.m., at the west gate of Renmin University, there was a small restaurant.

Lu Chenzhou, Wen Zhiyu, Zhang Yixing, and Xia Yaozong sat around a round table.

Xia Yaozong ordered a table full of dishes: braised pork belly, sweet and sour pork ribs, steamed sea bass, garlic broccoli, sauerkraut fish, dry-fried green beans...

Lu Chenzhou glanced at it but didn't say anything.

"You're treating," Xia Yaozong said to Lu Chenzhou.

"Why should I pay?"

"The license has been issued, the company is registered, shouldn't you treat us to a meal?"

Lu Chenzhou didn't refute, picked up his chopsticks, and took a piece of broccoli.

Wen Zhiyu sat down next to him, poured him a glass of water, and whispered, "Eat more meat, you've lost weight."

Lu Chenzhou glanced at her and picked up a piece of braised pork.

Zhang Yixing picked up a water glass as if to offer a toast, but the glass contained only water.

"Congratulations, Chenzhou."

Xia Yaozong also raised his glass: "Congratulations."

Lu Chenzhou picked up his water glass and clinked it against his.

"Thanks."

The four of them took a sip of water and then began to eat.

No one said much, but the atmosphere wasn't awkward.

Nine o'clock at night, dormitory 302.

Lu Chenzhou sat on the edge of the bed, opened his laptop, and glanced at the Hong Kong stock market closing data.

The Hang Seng Index closed at 15230 points, a sharp drop of 767 points in a single day.

Huaxin Pacific closed at HK$14.52, down 1.89%.

China National Building Material closed at HK$3.63, down 9.93%.

He refreshed his portfolio and checked his unrealized profits for the day, which totaled HK$8500 million.

He closed his laptop and leaned against the headboard.

My phone lit up. It was a message from Wen Zhiyu.

"Shall we eat in the cafeteria tomorrow at noon?"

He thought for a moment and typed two words: "Okay."

The other side replied with a smiley face.

He put his phone on the bedside table and turned off the light.

Outside the window, the lights of Zhongguancun bathed half the sky in an orange-red hue.

There were no stars in the night sky over Beijing, but the lights of the office buildings in the distance were densely packed, like another starry sky.

He closed his eyes.

Tomorrow is the weekend, the market will be closed, so he can rest for two days.

October 19, 2008, Sunday, 10 PM.

Conference room on the top floor of CITIC Tower, Central, Hong Kong.

When Rong Zhijian pushed the door open and came in, everyone stood up.

He waved his hand, gesturing for everyone to sit down, and then walked to the head seat and slowly sat down.

The movements were neither fast nor slow, just like usual.

The secretary brought him a cup of tea and placed it in front of him.

He didn't drink, his gaze sweeping over the faces on either side of the long table.

Zhang Lixian, Zhou Zhixian, Rong Mingjie, Rong Mingfang, Fan Hongling, Mo Weilong, and Li Songxing.

Every face was tense.

"Zhang Lixian," he called out.

Zhang Lixian sat at the other end of the long table as the Deputy Managing Director.

He was looking down, the folder in front of him was open, but his eyes weren't on the documents.

"Go ahead," Rong Zhijian said.

Zhang Lixian looked up, his face not looking well, with deep dark circles under his eyes.

"I take full responsibility for the Australian dollar contract."

Rong Zhijian did not respond.

Zhang Lixian said: "Starting in July, the Australian dollar weakened. At that time, we judged that it was just a short-term correction and did not stop the loss in time."

The decline widened in August, and unrealized losses on contracts began to increase.

By early September, the unrealized losses had exceeded...

"How much?" Rong Zhijian asked.

"In early September, the unrealized loss was approximately HK$50 billion."

A gasp went through someone in the conference room. Rong Zhijian's expression remained unchanged.

"Why wasn't it reported in time?"

Zhang Lixian remained silent for a few seconds.

I thought the Australian dollar would rebound.

Rong Zhijian glanced at him but didn't ask any further questions.

He turned his head and looked at Fan Hongling.

"How much is it now?"

Fan Hongling opened the documents in front of him.

"As of last Friday's close, the Australian dollar contract had a floating loss of 147 billion, the euro contract had a floating loss of 20 billion, and the total loss, including realized losses, amounted to 175 billion."

After listening, Rong Zhijian picked up his teacup and took a sip.

The tea was freshly brewed and a little hot. He blew on it and took another sip.

He frowned slightly, whether from the heat or something else, I couldn't tell.

"plan."

Fan Hongling said: "First, close out the positions. Close them all out and confirm the loss."

Second, restructuring. Negotiate with the bank to extend the contract period.

Third, hold until maturity and wait for the Australian dollar to rebound.

How much loss will I incur if I close the position?

"175 million."

"What about the parent company?"

"Mr. Chang said that the $15 billion standby credit line will arrive tomorrow."

"condition?"

"We haven't talked about it yet."

Rong Zhijian nodded and did not ask any further questions.

"Trading will be suspended tomorrow. An announcement will be released on Monday disclosing the losses and announcing credit support from the parent company."

"Trading will resume on Tuesday?" Fan Hongling asked.

Rong Zhijian glanced at him. "Trading will resume on Tuesday. Apply for suspension after the meeting, and trading will be suspended first thing tomorrow morning."

He spoke a little faster than usual, a fact only those familiar with him could notice.

Fan Hongling opened another document: "This week, Hong Kong stocks saw a significant increase in short positions in CEFC China Energy."

Rong Zhijian did not respond.

"Soros's fund, Paulson's hedge fund, and several offshore accounts have added more than $30 billion in notional short positions this week alone."

There was a moment of silence in the conference room, but Rong Zhijian's expression remained unchanged.

"Three billion," he repeated. "Anything else?"

Fan Hongling turned to the last few pages, his finger pausing for a moment.

"There is another account with a notional principal of 3.2 million, leveraged twice, and an average short selling price of 17.15. Half of the funds are used to short us."

"How much was the principal?"

"1.6 million."

"Who?"

Fan Hongling glanced at the notes.

"A student from Renmin University turned his initial capital into a multiplier through several rounds of trading in A-shares and Hong Kong stocks. In less than a month, it multiplied by tens of thousands of times."

Rong Mingjie frowned. Mo Weilong couldn't help but ask, "Students? 1.6 million?"

Rong Zhijian picked up his teacup and took another sip.

Then he put the cup down, closed the file, and pushed it aside.

"The students' affairs are not our concern." His voice wasn't loud, but every word was clear. "The three billion in short positions is what we need to deal with."

He glanced at Fan Hongling. "Continue."

Fan Hongling put the document away and turned to the next page.

The meeting continued, going over each item one by one: the resignation letter, the China Securities Regulatory Commission (CSRC), the wording of the announcement, and responses to the media after the resumption of trading.

Rong Zhijian asked every question to the point, and made every decision decisively.

Finally, he stood up.

"That's all for today's meeting. Before tomorrow, everyone must keep their mouths shut. Not a single word about this matter can be said to anyone."

Everyone nodded.

Rong Zhijian picked up the documents on the table, turned around, and walked out of the conference room.

In the corridor, Fan Hongling followed behind him.

"Mr. Rong, should we investigate those short-selling firms?"

Rong Zhijian didn't stop. "Investigate what?"

"Their timing..."

Rong Zhijian stopped, turned around, and looked at Fan Hongling.