Hong Kong Island's New Rich Era

Chapter 292 A Model of Caution

The price of gold rose sharply in May, and the news that Octopus Bank held a large amount of gold spot was known to some interested people.

They immediately became active and planned to follow the trend and speculate in gold spot/futures.

However, in early June, the price of London gold fell rapidly from US$380 per ounce to just over US$360, which scared a lot of people and brought the speculation to an abrupt end.

Facts have proved that even if Liu Zhicheng announced his investment plan, few people would be able to follow suit and make money.

Because they don't know when Liu Zhicheng will take profits. Or once these people encounter rapid losses, the first thing they do is to close their positions to avoid losing too much.

An unqualified mentality is the biggest drawback of most leeks.

For this gold speculation, Liu Zhicheng set his closing line at US$390 per ounce (London gold price), but he actually knew that it would break through US$400 this year.

Not earning the last penny is more important for time travelers, and it is also a magic weapon tailor-made for them.

As for the rapid drop in early June, Liu Zhicheng did not take it seriously at all, even though he did not know the highest price.

After all, his cost is only $330 per ounce, so his mentality is very good.

.........

Friday, September 6st.

Hao Qingwen, who returned from the auction with great success, reported his results to Liu Zhicheng.

"Boss, there are a total of 11 plots of land at this auction, and we won three government plots. We won the luxury residential land at No. 1 May Road that you requested for us at a price of HK$7.1 million.

Sino Properties and Kerry Properties took turns bidding for this piece of land, so the average floor price has reached HK$4500 per square foot, setting a record for the highest residential price ever sold at a government land auction.

Hearing this, Liu Zhicheng started to think about it.

No. 1 May Road is a luxury residential plot in Mid-Levels, and the construction cost of an ordinary residence is HK$1300 per square foot.

Since it is a luxury house, better materials must be used, and the construction cost must be at least HK$2000 per square foot.

Add in interest and taxes, and the cost per square foot will be as high as HK$8000.

The reason why Liu Zhicheng insisted on the land at No. 1 Mei Road was because it was said that the feng shui of this land was very good.

After the luxury building was completed in the previous life, it held the highest luxury home price in Hong Kong for a long time.

May Road, located in the Mid-Levels of Hong Kong Island, is a gathering place for luxury homes in Hong Kong and has several luxury housing estates.

"Well, although the price is high, at least I won't lose money at the current price. I'll just treat it as a long-term investment."

"Okay. What do you think of the architectural design of 1 May Road, Boss?"

Hao Qingwen knew that his boss liked these high-end properties and was also an excellent designer himself.

Liu Zhicheng thought for a moment and said, "I have visited the land, and my opinion is that the housing estate design and building materials must be outstanding.

The residents’ clubhouse should be luxurious, with all the recreational facilities and a lobby with elegant environment. Every unit should overlook Victoria Park and have a panoramic sea view of Hong Kong and Kowloon.

A truly ambitious work!
The entire Mid-Levels can only accommodate a dozen luxury residential tower projects, and Whampoa Group currently only owns Tresorge.

Although the cost per square foot of No. 1 May Road will be as high as HK$8000, Liu Zhicheng speculates that by the end of 1996, the price will be around HK$15000.

A total of 16 square feet of residential floor space can be built, and its value at the peak of Jiuqi was about 25 billion Hong Kong dollars, which was very profitable.

During the Asian financial crisis, Hong Kong real estate prices fell by 5% to 6% (on average. There were even cases where prices fell from 5 million to 1.5 million).

Therefore, before the financial crisis, Liu Zhicheng would sell part of his interest in No. 1 May Road. Otherwise, how could he buy it back at a low price after the financial crisis?

Hao Qingwen immediately said, "Okay, I will definitely find an excellent designer to make this project another benchmark luxury housing project in the Mid-Levels."

Liu Zhicheng said with satisfaction: "Well, luxury homes will be the main real estate that will rise in the next few years, and the increase will be greater than that of ordinary residential properties. Therefore, we don't need to worry about making little money from this project."

In fact, it is because Liu Zhiben himself likes luxury houses. Just like a child collects toys, he also likes to collect luxury houses, villas, office buildings, shopping malls, shops, etc.

He has no interest in ordinary residences, and all he owns are luxury properties. He particularly likes to collect the top floors of luxury buildings, which he neither rents out nor lives in, but simply keeps in his hands.

Perhaps before 2015, he will sell most of his properties and keep only the best ones to give to his children or a new lover.

After Hao Qingwen left, Liu Zhicheng called Li Mingtao, vice president of Huangpu Hotel Group.

Many of Huangpu Group (Hua Xia)'s projects in the mainland are livelihood projects. Since they require urbanization, they are led by the government and invested by developers to develop residential projects.

The government guarantees that investors will have a profit of 15% to 20% each year, and developers can have stable profits. This is also equivalent to limiting the developers' profiteering behavior because this is a people's livelihood project.

Although a 15% profit is considerable, if a Hong Kong developer were to develop the project on its own, the profit would definitely not be just this much.

Liu Zhicheng asked: "How are the third and fourth-tier hotels in the mainland developing?"

Li Mingtao said: "Through the Miramar Hotel, we have identified a total of seven three-star hotels and two four-star hotel development projects in second-tier cities such as Wuhan, Hangzhou and Foshan. All of them are developed through leasing properties. It is expected that the cost can be recovered in four to five years."

Liu Zhicheng immediately asked, "Is there any basis for saying that the cost will be recovered in four to five years?"

Li Mingtao nodded and said, "Yes, the occupancy rate of our three hotels that have opened is currently 86%. And as the mainland economy grows, this ratio will increase."

He had to sigh at his boss's brilliant strategy. After acquiring the Miramar Hotel, he immediately formulated a plan for mid- to high-end hotels in the mainland, adopted a property leasing model, and quickly deployed Miramar Hotels in some second-tier cities in the mainland.

However, third- and fourth-tier hotels are well suited to the current economic environment in the mainland, and their occupancy rates are much higher than those of five-star hotels.

"Well, then continue to look for suitable targets to open stores and plan the hotel market in the mainland as soon as possible."

"Ok"

After Li Mingtao left, Liu Zhicheng began to think. Although the Whampoa Group only owned 34.5% of the Miramar Hotel, it still tried its best to assist Yang Bingzheng in his development.

Because Liu Zhicheng knew that once Yang Bingzheng died, the Miramar Hotel would completely belong to the Whampoa Group.

As for the issue of low shareholding, he does not need to worry. After the financial crisis, it will be fine to increase the shareholding to 49%.

There is no need to delist so as not to hurt the feelings of our partners!

Liu Zhicheng has a motto that he always reminds himself: "When doing things, leave room for maneuver and don't do things to the extreme. Everyone makes money and everyone shares the benefits. Only in this way will people be willing to cooperate.

If taking 10% is fair, taking 11% is also fair, but if you only take 9%, you will make a lot of money."

This is also the reason why he insists on leading everyone to make a fortune together, even though he can make a lot of money by himself.

If he was greedy enough, he could privatize the Whampoa Group during the financial crisis, and he could afford the financial cost.

However, he must lead shareholders to make money together so that he can have enough influence and sense of accomplishment.

Huangpu Group has tens of thousands of shareholders, and they all hope that Liu Zhicheng can lead the company to make money. They are worried about Liu Zhicheng's health and Lin Zuhui's safety.

Just like Samsung’s Lee Jae-yong in the past life, the government wanted to put him in jail for a few years. As a result, it affected not only Samsung, but also the entire Korean economy. In the end, that was the limit.

Can Liu Zhicheng become the Lee family of Samsung in Hong Kong? He thinks it is inevitable! When his "cultural empire" is established, he will no longer be a simple real estate developer.

.........

In early August, Hongli Investment's foreign exchange positions were successfully closed, earning a profit of HK$8 billion and recovering funds of HK$56 billion;
At the same time, Octopus Bank also closed its gold spot positions, making a profit of HK$16 billion, which was less than expected because London gold fell rapidly after rising to US$409 per ounce.

As for spot liquidation, Hong Kong’s market is not that big, with a daily trading volume of only three or four tons. The daily trading volume of three or four tons does not mean that there is so much gold. Many gold bars are traded repeatedly, so it is indeed difficult to liquidate spot positions.

Fortunately, Octopus Bank's costs are low, so even if the stock price drops further, it can still make a lot of profit.

Because of the large-scale shipments by Octopus Bank, the spot gold price in Hong Kong was much lower than the London gold price, which caused quite a stir.

But, who cares!
Octopus Bank's 'accumulated losses' have been reduced to HK$21 billion (when it took over, the two banks had accumulated losses of more than HK$50 billion).

It was expected that all losses would be turned into profits in 1994, which was enough to shock the industry.

Originally, according to market commentators and experts, Octopus Bank needed to offset its accumulated losses by 1997, taking into account Liu Zhicheng's good reputation.

In fact, these people completely underestimated Liu Zhicheng's strength and credibility. Octopus Bank's deposits have been steadily increasing, and its loan business has also been flourishing.

Even without this investment in spot gold, Octopus Bank would have turned a profit ahead of schedule in 1996.

At this time, if the revenue and net profit of Octopus Bank were calculated by a listed company, it should be able to be ranked among the blue chip stocks.

After a brief inspection of Octopus Bank, Liu Zhicheng handed the matter over to the management. It was not the time to waste time yet;
To run a bank, you must have credibility, and credibility is accumulated over a long period of time, so Octopus Bank is still developing step by step.

…………

Hongli Investment.

Liu Zhicheng convened a core high-level meeting with nine people attending, five of whom were Chinese; not all of them were financial experts, there were accountants and auditors.

All the senior executives had relaxed expressions on their faces, because Hongli Investment had made a lot of money recently in foreign exchange and gold.

Although these investment projects were all initiated by the boss, he never treated them unfairly. Every time there was a gain, he would reward them according to their merits and distribute more bonuses to everyone at the end of the year.

Therefore, their salaries are no lower than those of some Wall Street elites, and their pressure is far less than that of the Chinatown elites.

Because almost every large capital investment was finalized by Liu Zhicheng himself.

Liu Zhicheng looked at the information in his hand. This was U.S. stock information compiled by Hongli Investment. It mainly covered three aspects: information technology, healthcare, and finance. There was detailed information and analysis on hundreds of stocks.

According to Liu Zhicheng's memory, these three areas saw tremendous growth in the 90s. If he just bought them randomly, he could make more than 2000 times the profit (index increase) from now to the beginning of 4.

What's more, he can still analyze a lot of high-quality stocks, such as information technology stocks, healthcare stocks, and financial stocks.

The increase in the share prices of Microsoft and Oracle alone is more than 20 times. Of course, these two stocks have been almost fully bought.

Yahoo and Amazon had not yet started their business, but that did not prevent Liu Zhicheng from making money from them.

Because these two companies went public around 1996, and in just four or five years, their market capitalization may have increased by dozens of times.

"I plan to take out 100 billion Hong Kong dollars to invest in securities. I have also read your analysis of which stocks to buy, and will then make my selections. The company can then organize the purchase."

After saying that, he handed the top-secret information to Smith.

Smith is also an old partner, and he immediately said seriously: "No problem, boss. We will definitely use offshore companies and multiple accounts to minimize the impact and maximize security."

Of course, Liu Zhicheng plans to divest the properties under Hongli Investment and put them into a trust fund, entrusted to Octopus Bank, and the beneficiaries are Yang Minli and her two sons.

As for the wealth growth of other women, Liu Zhicheng can now receive a large amount of dividends from listed companies every year, and can purchase assets and investments for them.

Liu Zhicheng went on to say: "Hongli Investment needs to recruit new elite talents and expand its scale. This company will be my key investment channel in the future, so I hope you will continue to work hard."

"Yes, boss!" everyone said in unison.

After arranging HK$100 billion in funds, Liu Zhicheng expects to have HK$50 billion in cash.

So he went on to say, "Open up investment channels for the Taiwan and South Korean stock markets for me as soon as possible. I need to invest in the finance of these two regions, so you need to set up offices in these places."

The two regions are invested casually without too much money, mainly in preparation for the aftermath of the financial crisis.

Moreover, even if one invests now, one can still make a lot of profit. For example, if one invests in Taiwan's Hon Hai, it is said that an investment of 1993 million in 1000 (current market value is about 20 to 30 billion) could yield a return of to billion (including annual dividends), a return rate of several hundred times, which is simply a huge profit.

Huang Zuxu said: "Korea's securities opened up 'direct investment channels' to foreign capital last year (1992), and Taiwan is currently in the QFII investment-dominated stage (Qualified Foreign Institutional Investors).

The government imposes dual restrictions on investment quotas and individual stock investment limits. If our investment scale is small, these two regions will not be difficult.”

Liu Zhicheng nodded. He naturally knew that Taiwan had been opened to overseas Chinese in the 1980s, but it was only indirect investment.

Although South Korea has opened up "direct investment channels", foreign investment cannot exceed 7% of a stock.

So they had to be taught a lesson by the Americans in 1998 and obediently relax the limit to 50%, and then to 100% a few months later.

There is a funny thing. During the Asian financial crisis in South Korea, the stock market once fell by 40%. The Koreans found that foreign capital was still selling, and everyone shouted, "Why don't you come to buy at the bottom?"

As a result, foreign capital still ignored it and continued to sell. When the Koreans saw that the price was still falling, they hurriedly handed over their chips. Foreign capital did not buy at the bottom either. So the American people negotiated with the Koreans and signed a series of unequal treaties.

For example, there are no restrictions on shareholding, and foreign investment is allowed to acquire Korean companies (including hostile takeovers). From then on, Korean conglomerates have replaced their major shareholders with European and American ones.

The key point here is that foreign investment is allowed, not European and American capital.

By then, Liu Zhicheng will also use capital to acquire some non-core assets of South Korea, so there will be no problem in getting a piece of the pie.

"I won't invest too much in any one stock. I don't like to invest too much in one stock. I like to diversify my investments."

"Okay, we'll arrange it as soon as possible."

After the meeting, Hongli Investment started running at high speed like a clockwork machine.

In fact, Liu Zhicheng has always felt that his career only began after the Asian financial crisis.

But now, he is just in the stage of "building high walls, storing up food, and slowly becoming king".

And money is by no means a cold number to him. He has a wife and children to support, so there is no reason for him not to work hard to make money.

Liu Zhicheng continued to instruct: "Buy 20 billion Hong Kong dollars of blue-chip stocks for me. Don't buy Whampoa Group, Cheung Kong, Sun Hung Kai, New World, and Henderson. For the rest of the blue chips, study them and buy them immediately. Try to buy them within 15 trading days. No need to rush!"

At this time, the market value of the Hong Kong stock market has approached HK$1.85 trillion, with a daily trading volume of more than HK$80 billion, and its capacity has also increased a lot.

Huang Zuxu nodded and said, "Okay." He continued, "Boss, we plan to buy 12 December futures contracts immediately, also for 10000 trading days."

Liu Zhicheng handed the responsibility of this year's index futures to Huang Zuxu. He gave a reference, which was that the index would skyrocket throughout the year; as for how to operate it, it was up to him to decide.

黄祖绪将五个月的期指交割月，都在前一个交割月买入；比如他年初买入的是四月，然后五月的是在四月买的、六月是在五月买的、九月是在六月买的、十二月自然就是在九月买。（全年交割月为4、5、6、9、12月）。

Each time you buy 1 contracts, the price is the index multiplied by 50 yuan, multiplied by 20% of the margin. Taking the current index of 7200 points as an example, a contract requires a margin of 7.2 Hong Kong dollars.

This year, except for a small loss in June, April and May were both big profits. Currently, the futures index still has a profit of over HK$1 billion.

Liu Zhicheng said: "Well, the operation is very reasonable, so let's do it this way."

"Ok."

In fact, although Liu Zhicheng knew the general trend of the Hong Kong stock market, coupled with his business status, he could be said to have a clear understanding of the Hong Kong stock market.

However, he is not greedy. The market value of the Hong Kong stock market is close to 2 trillion. Knowing that there will be another big wave of market this year, he still chooses to add 20 billion Hong Kong dollars to the market. It only accounts for one thousandth of the total, and he bought in 15 trading days. He can be said to be a model of prudence.

(End of this chapter)