Vicious dogs in Hong Kong, entrepreneurs practicing evil cultivation

Does the Hang Seng Index allow short selling?

The answer is similar to Hongkong Land's forced acquisition of Milk Company; there is no clear legal provision on whether it is allowed. The only legal basis is the Act of 1733, officially titled "The Act for the Prevention of Stock Speculation."

Ultimately, the bill was based on the market crash caused by the bursting of the South Sea Bubble in 1720, but it only prohibited "short selling," meaning it prohibited the sale of stocks that one did not own.

In other words, selling stocks you already own does not constitute "short selling," since that's how stock trading works.

The key is... time!!

As early as the "Tulip Mania" of 1637, speculators bought or sold tulip bulbs through forward contracts, and the short-selling mechanism was already in place.

Despite the existence of the "Forbidden Fruit Short Selling Act," it does not prevent mutually consenting short selling practices.

Chen Guanjiang's move is to "lend" 18.48 shares of Hongkong Land, either at the current price of HK$119 per share, or at any price within a six-month period.

Six months later, the 18.48 Hongkong Land shares will be "returned" at the share price at that time or during the six-month period, thus forming an alternative short-selling mechanism, which is essentially a bet between the two parties.

The question is, is Henry Keswick willing to take the gamble?

Only a fool would gamble like this now!

Not to mention that Jardine Matheson has a thorough understanding of Hong Kong's economic landscape, no professional securities firm would sign a six-month betting agreement when a financial bubble is about to burst.

However, knowing this, Chen Guanjiang not only openly proposed it, but also made the exchange directly in front of the taipan of Jardine Matheson, the parent company of Hongkong Land Group.

"Don't even think about it!"

After a long stare, Henry Keswick withdrew his murderous gaze, his expression calm yet aloof.

Despite being rejected, Chen Guanjiang remained unfazed, still smiling obsequiously, "Henry gave birth to you because you're a tycoon. I'm practically handing you old meat; shouldn't I at least give you a couple of bones in return?"

“…………”

Henry Keswick was taken aback. So this "leader" who had taken the lead in refusing to exchange shares was preparing to lead his "flock" into the wolf's den and use it as a bargaining chip to get a couple of bones to eat.

This is hardly a leader; it's clearly a sheepdog in sheep's clothing, and a vicious one at that, driving the flock into a wolf's den.

Beside them, the foreigner Val and the traitor Song Qifeng, connecting the two men's conversation with the events, suddenly realized what they were talking about, and were so frightened that they couldn't help but tremble all over.

Is this something they can hear?

Is this something they deserve to hear?

Henry Keswick gave them a warning look, but didn't bother to pay them any attention, weighing the pros and cons.

At the beginning of the year, Henry Keswick took over as patriarch of the Jardine Matheson Group and began planning to acquire the Dairy Farm Company, which he secretly began to implement in July.

Over the past four months, the Jardine Matheson consortium has done more than just investigation; more importantly, it has secretly used HK$2.7 million in cash to increase its stake in Hongkong Land and Dairy Farm.

Hongkong Land Group's share swap with Dairy Farm Corporation, being a "swap," obviously doesn't require cash. Henry Keswick's intention in increasing his stake is to achieve "three benefits from one fish."

What is meant by "one fish, three ways"?

First move: Once the HK$2.7 million acquisition was completed, Hongkong Land immediately announced the merger and acquisition, taking advantage of the hot stock market to fleece those fat sheep.

The second strategy: Once Hongkong Land completes its acquisition of Dairy Farm, it will proactively burst its own financial bubble and suppress its stock price.

The third tactic: taking advantage of the depressed share price of Hongkong Land to use the cash harvested from shareholders to further increase shareholding.

With proper handling, one can acquire a dairy company without incurring huge costs, and with a bit of luck, even make a small profit—quite a pleasant surprise…

As early as when Milk Company was at HK$60 per share and Hongkong Land was at HK$33 per share, the Jardine Matheson consortium began to secretly increase its shareholding, and only announced the acquisition after the HK$2.7 million was exhausted.

Chen Guanjiang's holding cost was HK$80 per share. Jardine Matheson, due to its large capital and concerns about exposure, took a longer time to acquire assets, so its holding cost for Dairy Farm was slightly higher at HK$86 per share, while Hongkong Land's was HK$69 per share.

Although the cost of holding shares is high, the size of the shares held by the two parties is vastly different. Chen Guanjiang holds only 9.24 shares of Dairy Farmers with HK$738 million, which is less than one percent of the shares.

Jardine Matheson, however, increased its holdings in Dairy Farm by 156.9 million shares, representing 15.69% of the total share capital, and in Hongkong Land by 195.7 million shares, representing 3% of the total share capital.

Based on this calculation, Chen Guanjiang should have exchanged 9.24 shares of Dairy Farm International Holdings for 18.48 shares of Hongkong Land Holdings.

Using Hongkong Land shares as collateral to borrow 18.48 Hongkong Land shares is just two bones for the Jardine Matheson consortium.

Although Henry Keswick didn't want to give them even these two bones, MacLehose only tacitly allowed Jardine Matheson to acquire Dairy Farm, but did not agree to Jardine Matheson's manipulation of the stock market and taking away all the shareholders.

Harvesting shareholders and making three profits from one fish was nothing more than Henry Keswick's scheme. Once the die was cast, Murray Hoo couldn't make him give back what he had taken.

but! !

Since the dairy company has not yet been acquired, MacLehose has the right to stop the takeover at any time. A hostile takeover offer is neither legal nor compliant.

If this hungry dog, unable to get a bone, were to bark and cause shareholder protests that affect MacLehose and lead to the halt of its acquisition, things would get very serious.

This mad dog has few shares; it can run away before it barks.

In contrast, given the high shareholding of the Jardine Matheson consortium, it's impossible for the "left-wing" Hongkong Land to relinquish it; that would be a classic case of trying to steal a chicken but losing the rice instead.

Don't be fooled by this mad dog's initial fawning smile and wagging tail, followed by its tantrums and rolling around begging for a bone; it can also leap up and bite at any moment.

Even three years ago, Henry Keswick could have at least broken his legs, if not smashed his head, to teach him a lesson.

But that won't work now. Hitting a dog might attract a giant, who would then grab him by the neck and ask why he hit his own dog.

It's just two bones; there's no need to provoke the mad dog and anger the giant, especially since this lead dog came with meat in the first place.

The matter has been discussed openly; there's no point in dwelling on it.

Henry Keswick laughed heartily and said, "Good dog! Now you know what to do, right?"

"Yes, sir."

The two parties immediately signed an agreement, with Jardine Matheson contributing 36.96 Hongkong Land shares and Chen Guanjiang and Jardine Matheson's General Manager, Karl, going to HSBC to settle 9.24 Dairy Farm shares.

The foreigner, Val, who was supposed to be in charge of Chen Guanjiang's affairs, was kept behind and immediately swore, "Henry, I swear in the name of God, I will absolutely not leak this information. I will stay with the company during the acquisition!"

"Me too," Song Qifeng, the traitor, followed closely behind.

While it is unknown how much Dairy Farm and Hongkong Land stock Henry Keswick increased his holdings in over four months, his manipulation of the stock market under such circumstances clearly indicates that he was taking advantage of MacLehose.

Once the truth is revealed, those who know the inside story will become suspects, so it's better to stay in the company during the acquisition period and wait for the storm to pass.

"You are all my most trusted subordinates..."

Henry Keswick chuckled and continued, "This month's bonus is doubled. I'll send someone to inform your families; you shouldn't go anywhere for the time being..."