Rebirth of the Financial Crisis Sweeping the World

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The following day, Saturday 12 July.

Wang Guanxi ate fried noodles at noon.

The latest political news is here.

Bloomberg News: AIG Group Huge Loss!

American International Group, referred to as AIG.

AIG is a world-renowned insurance group company, and also the world's largest insurance group and diversified investment group. It has assets of 1.1053 billion US dollars!

Assets over US$1 trillion, what a concept!

7.75 trillion Hong Kong dollars!

What a horror.

Like the US Fidelity Investment Group with assets of 2 trillion US dollars, the Big Mac is also!

AIG Group owns two very famous insurance companies, American Asia Insurance and AIA!

The history of AIG Group can be traced back to 1919, when Dutch-American Schneider established an insurance agency company, American Asia Insurance, in Lushi, Huaxia, to provide customers with fire insurance, marine insurance and other protection.

Two years later, Shide established the AIA Life Insurance Company and became the first foreign company to provide life insurance products and services to Huaxia people. This is a figure who pioneered the Huaxia insurance industry.

In just a few years, Shide expanded its business to many regions in China and even Southeast Asia.

However, due to the outbreak of the war, Shi De moved the company's headquarters from Lushi to the United States, and then withdrew from the insurance business in the mainland. In 1992, it reopened the insurance business in Lushi.

Now AIG is already a giant company, and its American Asia Insurance and AIA are the two most profitable giant insurance companies.

Customers in the mainland are familiar with it. Many employees of state-owned enterprises and private enterprises have bought insurance from this insurance company.

However, this year is a disaster year for AIG Group. The entire subprime mortgage crisis almost destroyed it. The financial tsunami that broke out in September 2008 made AIG fall into a quagmire. In the fourth quarter of 2008, it lost 61.7 billion US dollars!

Accepted the bailout, but in order to repay the US government's 180 billion US dollars in debt, it sold a large amount of assets, and the AIA was also sold in the future. This AIA will have a market value of trillions of Hong Kong dollars in the future!

It's July, and bad news has come out for AIG.

Of AIG's $38 billion write-down, $20 billion came from credit default swaps. $18 billion came from mortgages and asset-backed securities, including subprime home loans.

"AIG Group finally survived by selling a huge amount of assets to pay off its debts, while another super investment bank, Lehman Brothers, collapsed with a total debt of 613 billion US dollars, which became the tipping point of the financial tsunami"

"The financial tsunami is not far away!"

Wang Guanxi then turned on the computer and checked the public balance sheet of the listed company AIG.

The quarterly report for June 2008 shows that there are 1.0498 billion US dollars, but it should be noted that many of these assets are subprime mortgage claims or bad debts of subprime derivatives, so the numbers are just numbers, and we will not know until the financial tsunami comes out How much loss is there!

Wang Guanxi intends to short the stock of AIG, but his own funds will be used to short the Hang Seng Index, so he has to use the funds of Catalan Auto Insurance to short.

However, the funds of Catalan Auto Insurance are also limited, and they cannot mobilize much funds.

Don't look at the 550 million assets of Catalan auto insurance, but the insurance company has regulations and cannot use all the funds!

The use of funds by insurance companies is limited to the following forms:

1 bank deposit;

2 Buying and selling bonds, stocks, securities investment fund shares and other securities;

3 investment in real estate;

4. Other forms of fund utilization stipulated by the government.

To give a simple example, mainland insurance companies stipulate that the funds invested in stocks and securities are limited to less than 30%.

Hong Kong is a little different.

A margin of solvency is required, which means that an insurance company's assets must exceed its liabilities by a specified amount. As far as the general insurance business is concerned, the solvency reserve is the higher amount of the premium income of the insurance company in the previous financial year, or the liabilities. For the part within HK$200 million, the solvency reserve is calculated as one-fifth of it. , and the part below HK$200 million shall be calculated as one-tenth of it. The minimum margin of solvency is HK$10 million.

To be more specific, the liability of Catalan Auto Insurance to insurance customers is 500 million Hong Kong dollars, so Catalan auto insurance needs to prepare a minimum repayment reserve of 50 million Hong Kong dollars to compensate for insured accidents that occur at any time.

Of course, the 50 million Hong Kong dollars is only a theoretical amount. In reality, Catalan auto insurance needs to prepare more solvency reserves to deal with insurance accidents that occur at any time, and there is also the supervision of the China Securities Regulatory Commission.

But just prepare a repayment reserve of 200 million Hong Kong dollars, and use the rest to do it!

"Insurance companies have the most cash. Before the global financial tsunami hits, I have to buy a few more insurance companies. Then there will be more funds available."

"Mobilizing 2 billion funds to short the stock of AIG Group, it is absolutely very cool"

"I remember that AIG's stock price fell from more than $400 a share to shit. The financial empire collapses at any time"

Although Wang Guanxi's cash is only 200 million now, he has already stared at this huge AIG, saying that he has to bite off two pieces of meat from it.

AIG Group is like a scarred elephant, with vultures in the sky, carnivores on the ground, and blood-sucking insects circling around it. Not far away, there are tigers, wolves, hunting dogs, and leopards. Once it fails, everyone They will all jump up and bite.

AIG's losses have only just begun. When the global financial tsunami hit, it was such a behemoth that its assets shrunk the most and its losses were the most serious.

In order to save its life, it will frantically sell the securities assets it holds, and sell stocks, bonds, houses, various canteen assets, and financial assets in a short period of time. It is conceivable that the stocks sold by it will How bad the fall is, how panicked the market will be!

And it's not just one of them selling assets crazily, there are many, many such financial institutions around the world.

"The main business of American Asia Insurance and AIA under the AIG Group is in Asia. I don't know how many Hong Kong assets they hold. It is unimaginable to sell them at that time."

··

At this moment, the Asian headquarters of AIA, a subsidiary of American International Group, has just gone through a high-level temporary meeting.

The meeting discussed the sale of certain Asian assets to ease the financial pressure on the parent company AIG.

AIA and AIG are the two underlings of the AIG Group, and the two insurance companies that make the most money.

This time the parent company came to instruct that they need to gather some capital turnover, about 10 billion Hong Kong dollars, of which 5 billion Hong Kong dollars will be paid by AIA.

Chief Financial Officer of AIA: John Barrie Harrison

John Barry Harrison, abbreviated as Harrison.

He came to the office.

Several assistants followed.

Opened the trend charts of each stock and glanced at them.

Recently, Sinopec, CNOOC, and PetroChina are all falling, while AIA holds a lot of stocks, but they have sold them.

Then Harrison ordered: "Next Monday, we will start selling some stocks of Sinopec, CNOOC, PetroChina, and CCB, and cash out 5 billion Hong Kong dollars in cash."

"Yes, Mr. Harrison"

At this time, the assistant suggested: "Mr. Harrison, the stock of China Resources Beer Group has risen a lot recently, should we sell its shares, so that we may be able to cash in more cash."

"Let me see first." Harrison then opened up the stock of China Resources Beer. Recently, the stock of China Resources Beer has been very strong, and the stock price is at a high position. He is very happy.

Then he ordered: "Then cash out all the stocks of China Resources Beer, Sinopec, and keep the stocks of CNOOC, PetroChina, and China Construction Bank."

"Yes, Mr. Harrison" the assistant nodded respectfully.

After thinking about it, Harrison notified the chief financial officer of the American Asia Insurance Company.

··

The next day, July 13, American Asia Insurance, Property Director, Garthjones.

Garth Jones.

Just after he returned to Hong Kong from Lushi, he came to the company and held a temporary meeting.

Ask your subordinates to sell the stocks of China Resources Gas, ICBC, HSBC, and Standard Chartered Bank, and cash out HK$5 billion to ease the financial pressure on the parent company AIG Group.

Fast forward to Monday and the stock market opens.

AIA, American Asia Insurance Company, began cashing out shares.

Morning session.

China Resources Beer, China Resources Gas stocks fell sharply, ICBC, HSBC, Standard Chartered Bank, Sinopec also fell a lot.

Wang Guanxi was happy.

The stock of China Resources Beer fell by 5 yuan today, from 25.00 yuan per share to 20.00 yuan per share.

There is a floating profit of 50 million Hong Kong dollars in his account.

"Today, the stock prices of China Resources Beer and China Resources Gas have fallen very badly."

"cool"

"Waiting to collect the money."

As for the AIA Insurance Company, Harrison stood in the trading room and watched the stock of China Resources Beer fall to 20.00, so he ordered: "In the afternoon, if the stock price rises, sell it tomorrow."

"Yes, Mr. Harrison," the assistant quickly ordered to the traders in charge of stocks.

As for HSBC Trust Company, Jiang Quangang ordered: "In the afternoon, start increasing your holdings."

"Yes, Mr. Jiang"

So after the market opened in the afternoon, the stock price started to rise again under the increased holdings of HSBC Trust Company.

21 yuan per share.

22 yuan per share.

During the period, many retail investors also flocked here, wanting a piece of the action!

The retail investors who bought the bottom here before also increased their positions one after another!

There is a lot of buying in the market.

Even traders from investment banks came in to do short-term trading.

Soon the stock price rushed to the 25.00 position again.

But it has not stopped yet, and continues to rise until it stops at 26.00.

However, traders in those investment banks sold their stocks after taking profits, and the stock price fell to 25.00 again.

Some retail investors who lacked confidence also left the market at a profit and sold their stocks.

At the last close, the stock price fell to the 24.00 position.

There is still a floating profit of 10 million Hong Kong dollars in Wang Guanxi's account.

But he knew that the share price of China Resources Beer would soon be unsustainable.

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