Rebirth of the Hong Kong Millennium Conglomerate

Chapter 82 The Hong Kong Stock Market Continues to Decline

In the winter of 1973, the waves of Victoria Harbour still lapped against the embankment, but the once bustling docks were now quieter and less noisy.

The horns of cargo ships have become sparse, the goods piled up on the shore have not been moved for a long time, and even the neon lights in the streets and alleys are no longer as bright as they used to be. An oil crisis originating from the Middle East is sweeping the world with overwhelming force, and this prosperous Pearl of the Orient has ultimately not been able to remain unscathed.

Since the outbreak of the Fourth Middle East War in October, the oil embargo and production cuts imposed by Arab oil-producing countries have stirred up huge waves in the global energy market, like a boulder thrown into a calm lake.

International crude oil prices soared from less than $3 per barrel before the war to $11.65 per barrel in December, an increase of more than 300% in just two months. For Hong Kong, which is heavily dependent on oil imports, the impact of this crisis was far more severe than imagined.

The first to feel the changes were the daily lives of ordinary citizens. In response to the oil shortage, the government officially implemented a strict blackout policy.

Every evening, as the announcement on the loudspeaker rings out, the neon lights of most shops across Hong Kong are turned off on time, and half of the streetlights on both sides of the street are turned on, suddenly turning the once brightly lit night scene of Hong Kong into a dim one.

The once bustling commercial districts of Causeway Bay and Tsim Sha Tsui are now eerily quiet after nightfall, with only a few convenience stores still dimly lit, and long queues forming outside as people rush to buy daily necessities.

Taxi drivers are even more worried. The soaring oil prices have caused operating costs to skyrocket, and many drivers have chosen to reduce their driving time, making it extremely difficult to hail a taxi on the street.

Public buses were packed with passengers, and the carriages were filled with complaints. What should have been a convenient way to travel had become an ordeal.

The industrial sector's predicament has been exacerbated. Hong Kong's manufacturing industry is mainly based on light industry, with sectors such as textiles and plastics having a huge demand for electricity and petroleum derivatives.

The surge in oil prices has directly led to soaring electricity costs, forcing many factories to implement a "three days on, four days off" production schedule, and some small and medium-sized enterprises have even gone bankrupt because they could not afford the costs.

News of factory layoffs continues to emerge, the unemployment rate is rising steadily, and the number of unemployed people on the streets is increasing day by day. The once vibrant industrial area is now desolate.

The most severe impact of this crisis undoubtedly fell on the Hong Kong stock market. With the full outbreak of the oil crisis, the stock market's decline spiraled out of control, staging a breathtaking "free fall."

Inside the exchange, the once bustling trading hall is now shrouded in an atmosphere of despair.

The electronic screen was covered with countless red downward arrows, and news of plummeting stock prices kept popping up. Every time the numbers on the screen changed, it was accompanied by the cries and sighs of the investors.

Some people slumped in their chairs, staring blankly at the ever-decreasing index, clutching their stock certificates, which had already shrunk considerably in value.

Some people lost control of their emotions at the trading desk, yelling at the staff and trying to sell their stocks, only to find that no one was willing to buy them.

Some elderly stock investors, whose life savings had vanished in the stock market crash, covered their faces and wept bitterly on the spot, a scene that moved many.

In this stock market crash, Hutchison Whampoa, once a shining star, became one of the companies most severely impacted.

Hutchison Whampoa, a long-established British-owned enterprise in Hong Kong, has a business portfolio covering multiple sectors including shipping, real estate, and retail.

The surge in oil prices caused a sharp increase in Hutchison Whampoa's costs.

At the same time, the global economy fell into recession due to the oil crisis, international trade volume declined sharply, Hutchison Whampoa's business orders decreased sharply, and revenue plummeted.

To make matters worse, Hutchison Whampoa's previous expansion in the real estate industry had been too aggressive, leaving it with huge debts.

During the stock market boom, the company's share price soared, reaching a high of HK$44 per share. Thanks to the high share price and market confidence, the debt problem was temporarily masked.

However, with the outbreak of the stock market crash, market confidence completely collapsed, and investors sold off Hutchison Whampoa's shares, causing its stock price to plummet.

From HK$44 to HK$40, then to HK$30, and then to HK$20—the stock price fell much faster than anyone expected. In just a few months, it plummeted from its peak to just over HK$1, a drop of more than 97%.

The plunge in stock price further exacerbated Hutchison Whampoa's financial situation.

The company's market value shrank dramatically, its financing channels were completely shut down, and its already heavy debt burden became even more unbearable.

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Creditors came knocking on the door demanding payment, and banks tightened credit, plunging Hutchison Whampoa into a severe financial crisis and bringing it to the brink of bankruptcy.

Zhang Zeyang stood in front of the floor-to-ceiling window of Qiangu Securities Company, gazing at the dim street scene outside with a deep look in his eyes.

He clearly remembered that in the course of his previous life, this crisis had been a fatal blow to Hutchison Whampoa.

In September 1975, Hutchison International held a shareholders' meeting. In order to alleviate the financial crisis, the board of directors proposed a rights issue, but it was rejected by the shareholders represented by HSBC.

At that time, Hutchison Whampoa's creditors had taken legal action to demand that the company be liquidated and its debts repaid.

Beset by internal and external troubles, the board of directors was ultimately forced to accept HSBC's suggestion, which allowed HSBC to inject HK$1.5 million to acquire a 33.65% controlling stake in Hutchison International. HSBC thus became the largest shareholder of Hutchison International, and the once glorious Hutchison Whampoa was completely reduced to a subservient position to the bank.

Thinking this, Zhang Zeyang tapped his fingertips lightly on the windowsill. He decided to wait until the time was right and then directly acquire Hutchison!

"Sir, you've arrived." A soft voice came from behind. Su Qing quickly walked to Zhang Zeyang's side and handed him a cup of warm coffee.

As the current head of Qiangu Securities, Su Qing is under tremendous pressure during this stock market crash.

Zhang Zeyang took the coffee, turned to Su Qing, and said, "Su Qing, pass on the word and start the stock buyback program."

Upon hearing this, a look of understanding flashed in Su Qing's eyes. At this moment, the Hong Kong stock market was in the midst of a crash, market confidence was completely lost, and the vast majority of investors were frantically selling their stocks, fearing that their shares would become worthless.

In this market environment, choosing to repurchase shares is undoubtedly the best option!

"Sir, shouldn't we wait a little longer?" Su Qing asked.

Zhang Zeyang smiled slightly, placed his coffee cup on the desk beside him, and said, "This stock market crash has basically bottomed out at this point, and now is the right time."

"We borrowed a lot of stocks to sell in order to short the market, and now it's time to buy back and close out our positions."

"I understand what you mean, sir," Su Qing replied.

"However, it should be done in batches, and the pace should be controlled. Our goal is to buy back shares, not to drive up the share price."

Market confidence is extremely fragile right now. If we were to enter the market on a large scale and buy up shares, it could trigger a short-term market rebound, which would make it difficult for us to complete the repurchase at the lowest possible cost.

"You should place buy orders in multiple small batches. Don't buy too much at once, try to match the market's trading rhythm, and avoid attracting the attention of others."

Su Qing nodded in response and asked, "Sir, how long is our buyback period?"

"There's no fixed deadline; the goal is to complete all repurchases," Zhang Zeyang said. "If the market continues to decline, I..."

We will continue to recruit in batches.

If the market rebounds, we will slow down the pace of buybacks, or even pause them for a period, waiting for the stock price to fall before resuming. In short, the core focus is on cost control; we should not rush things.

"I'm leaving this matter entirely in your hands. Report to me immediately if anything happens."

"Please rest assured, I will definitely handle it well," Su Qing solemnly promised.

After leaving Zhang Zeyang's office, Su Qing got busy. She convened the company's core trading team for an emergency meeting, conveyed Zhang Zeyang's instructions, and formulated a detailed repurchase plan.

The staff members performed their respective duties and began to carry out the repurchase operation in an orderly manner according to the plan.

Small buy orders quietly appeared on the trading screens of various stocks, like trickles of water merging into the surging sell orders.

These buy orders neither triggered a market rebound nor attracted the attention of other investors; they were simply quietly absorbing the shares that had been sold off in panic.

After handing the matter over to Su Qing, Zhang Zeyang got up and left Qiangu Securities Company.

He had complete faith in Su Qing's abilities. Since the core principles and operational details of the stock buyback plan had been clearly defined, she was confident that she could handle it well, and he didn't need to get involved any further.

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