Chapter 626
Asian Financial Crisis
Ping An Bank Building.
Chen Wensheng, the fourth son of the eldest branch of the Chen family, is methodically inspecting the 'cash-out operation'.
Ping An Investment holds securities worth over HK$65 billion in Hong Kong, representing approximately 1.3% of the total market capitalization of HK$5 trillion in Hong Kong stocks. Starting in May, Chen Wensheng received instructions from his father to gradually liquidate these holdings within six months, retaining only a small number of shares related to Cheung Kong and Hutchison Whampoa.
Chen Wensheng had only heard such instructions once before, in 1981, and then came the massive crash of 1982-1984. He hadn't heard them even during the '87 stock market crash,' the '89 stock market crash,' or the 'third oil crisis,' and in those three instances, he only reduced his holdings by about 30%.
Therefore, Chen Wensheng believes that this large-scale cash-out is definitely due to the 'big problem' in Southeast Asia, which then swept across the entire Asia.
Fortunately, in recent years, Ping An Investment has also expanded its business to Europe and the United States. For example, Barings Bank, which it acquired two years ago, now has net assets of over US$2 billion. Just by starting to buy Nikkei futures in late June 1995, it earned US$800 million by mid-1996, erasing its previous failures. As for other funds, much of it came from Ping An Investment, which invested in two major European telecommunications groups, as well as American internet and high-tech companies.
In addition, Ping An Investment also cashed out properties worth HK$150 billion in Asia, and has property trusts worth tens of billions of Hong Kong dollars and securities worth tens of billions of Hong Kong dollars in Europe and the United States.
The net assets of Ping An Investment are over 1000 billion yuan. Moreover, Ping An Investment is not listed on the stock exchange, so Chen Wensheng's net worth has always been estimated by magazines and newspapers as '50% equity in Ping An Bank'.
Ping An Bank, on the other hand, once had a market capitalization of over 1200 billion yuan, making it the third largest bank in Hong Kong after HSBC and Bank of China (Hong Kong), with assets exceeding those of Standard Chartered.
"Dad, the total trading volume of the Hong Kong stock market reached HK$500 billion in June, and we cashed out a little over HK$11 billion." Chen Wensheng's second son, Chen Zezhi, walked in and reported on his work.
Chen Wensheng, 55, has three sons and one daughter, the youngest of whom is his daughter. His eldest son, 30, is a director of Ping An Bank; his second son, 27, joined Ping An Investment; his youngest son, 23, is interning at Barings Bank; and his daughter is still studying at university in the United States.
Ping An Bank generally does not allow 'family succession', but continues to rely on 'professional managers', so the eldest son will generally not serve as president, but special circumstances may prevent him from taking over as president.
The third generation of the Chen family almost all joined the business world, because they continued to do business only when there were enough positions available. If there weren't enough positions, they would probably have taken other professions.
Of course, other professions can also lead to business ventures. For example, the eldest granddaughter, Chan Sze-ki, was originally a lawyer but later became a CEO. Even within Hong Kong's wealthy circles, there are doctors who have gone into business, and there are more than just one or two.
"Higher than the expected market capitalization?"
Chen Zezhi immediately said, "The main problem is that the stock market has been too crazy lately. When we cashed out, the stock price was still rising!"
Chen Wensheng nodded and said, "The results may not meet expectations, but overall, cashing out over 600 billion is not a problem!"
“There’s definitely no problem. Moreover, we’ve retained our stakes in Cheung Kong, Hutchison, and HK Electric, so our assets worth HK$650 billion won’t depreciate by a single cent.”
"Okay, go ahead."
After the son left.
Chen Wensheng also began to consider establishing a 'father-son trust'. He was the last to establish one, as his three older brothers had already established father-son trusts long ago.
Of course, this is also because Ping An Investment itself is an 'investment company'.
“The internet is a great investment. But since my father didn’t let me invest, I can’t invest heavily in US stocks, since the family has already invested a lot in those areas,” Chen Wensheng muttered to himself.
As a key figure in the family office's investment department, he naturally knew through various channels that the Chen family had made significant investments in the European and American internet sectors.
He didn't choose to follow the trend because his father hadn't given any instructions, and he was also worried that everyone was too focused on the same thing.
He was still an obedient 'child'.
However, apart from a portion of the HK$70-80 billion cash flow raised this time being used for future share buybacks, the remaining funds have no investment channels at the moment.
Therefore, Chen Wensheng plans to establish a 'father-son trust' to provide his children with a livelihood guarantee in the future.
The day after Hong Kong's return to China, the Thai baht was attacked, triggering an unprecedented "Asian financial crisis."
However, Hong Kong, thousands of miles away, was still immersed in the lively atmosphere of "horses still running, dancing still going on, and stocks still being traded," completely unaware that the incident would affect the lifeline of Hong Kong's economy.
In fact, on the first trading day after the return, the index gradually slipped to 18703.73 points on July 9, driven by some investors taking advantage of the "good market" to sell off their holdings. However, it soon rebounded to the 19000-point level due to the booming real estate market and the renewed influx of foreign capital. At the end of the month, it quickly broke through the 20000-point mark, closing at 20365.71 points, leaving many stock market investors who chased the waves in a frenzy.
Entering August, driven by the heated trading atmosphere, the index climbed to a historical high of 20673.27 points on August 7.
从4月3日的15005.17点至8月7日的20673.27点，指数在4个月内升了 5668.10点，累积升幅达38.3%。
Starting August 8, the index gradually declined from its high point as institutional investors cashed out their profits.
On August 19, the index plummeted 719.62 points due to rumors that investment institutions were bearish on the Asian market and were selling off their holdings.
Afterwards, although there was a slight rebound, the magnitude was not large.
On August 28, another panic sell-off occurred, causing the index to plummet by 787.85 points. As the decline triggered program selling by institutional investors, the index plunged another 900.85 points at the opening of the market the following day.
As a result, the index closed at 17635.25 points at the end of the month.
与8月7日高峰期的20673.27点相比，合共跌去了3038.02点，跌幅达15.2%。
Following the sharp drop at the end of August, the index plunged again by 709.60 points on September 1st, driven by frantic selling by investors, causing heavy losses and widespread distress among many investors. Due to the rapid decline in a short period, the market experienced a technical rebound after September 2nd, briefly climbing to 18000 points.
Since the index climbed back above 18000 points at the end of September, it rose to 18128.02 points on the first trading day of October, driven by a surge in buying.
Subsequently, profit-taking once again dominated the market, pushing the index down to 16084.24 points on October 15.
As the financial crisis has already caused enormous and severe damage in Thailand, South Korea, Indonesia, Malaysia, and Singapore, some investors have noticed the seriousness of the situation and anticipate that Hong Kong may also be targeted.
As expected, US-based international hedge funds, which have always regarded Asia as a "cash cow," had already identified the weakness in the Hong Kong dollar's linked exchange rate, which has always been regarded as the cornerstone of Hong Kong's economy and finance. On October 20, they launched a fierce attack, driving up Hong Kong's interbank offered rates, causing great concern among investors, and the index plummeted by 730.13 points.
The following day, Morgan Stanley, which shares the same views as international hedge funds, publicly stated that it would reduce its investment in Asian markets and pointed out that Asian stock markets were already in a dangerous downward cycle, and that the second wave of decline might even be driven by Hong Kong.
Beset by attacks from both sides, Hong Kong dollar interest rates soared, while the index plummeted by 667.78 points and 865.33 points on the 21st and 22nd respectively.
Since hedge funds were unable to cripple the Hong Kong dollar in the first round of attacks, they launched another offensive on October 23, causing the interbank offered rate (HIBOR) to rise again to a historic high of 280%, while the Ping An Index set a new record for a single-day drop of 1411.47 points.
As the Hong Kong dollar held firm despite attacks from hedge funds, the stock market rebounded sharply on October 24, rising to 13544.34 points.
However, hedge funds continued to target the Hong Kong dollar and launched attacks on October 27 and 28, causing the Ping An Index to plummet by 2084.45 points in just two days, breaking through the psychological threshold of 12000 points and plunging some investors into extreme panic.
Despite repeated attacks, the Hong Kong SAR government insisted on using its massive reserves as a backing to ensure the Hong Kong dollar exchange rate remained unchanged. As hedge funds failed to achieve their objectives, the Ping An Index slightly rebounded to 12823.78 points at the end of the month.
Compared to the 18128.02 points at the beginning of the month, the index has fallen by 5404.24 points in just 20 trading days, a drop of 30%. It is not hard to imagine the magnitude of the market fluctuations and the intensity of the battle.
"What? You're both pregnant?" On the superyacht 'Tranquility', Chen Guangliang was initially in a good mood. He didn't intend to intervene immediately regarding the recent 'Asian financial crisis.' He also noted that international speculators had indeed profited handsomely from their attacks on the Hong Kong dollar and Hong Kong index in October.
It's quite simple. The Hong Kong stock market and property market have been overheated, so it's time to cool things down. Of course, when international speculators come to Hong Kong again next year, the Chen family will naturally choose the right time to respond and take the opportunity to buy at the bottom, since it's a long-term investment.
In its previous life, Hong Kong was in decline for at least five years. This time, it is clearly impossible. With the development of "Hong Kong through science and technology" and "Hong Kong through culture", coupled with a more solid foundation than in its previous life, it will definitely recover gradually in the new millennium, just like South Korea.
But at this moment, Chen Guangliang's mood sank. He saw Li Jiaxin and Li Jiaming standing in front of him, like children who had done something wrong, waiting to be taught a lesson.
Li Jiaxin said cautiously, "Mr. Chen, I've thought about it. My wealth is now approaching 10 billion (9 billion). If I only have one son, it won't be enough to ensure the continuation of your bloodline. So I'd like to have another child. As for..."
Chen Guangliang immediately felt a headache coming on. He didn't like carrying balloons, so he usually made women take medicine, or swallow it, or insert it into their anus.
Over time, he became more carefree, not even knowing whether they were taking their medication, which naturally created more opportunities for them.
"Nonsense, I'm almost 88 years old. I won't wait for them to grow up."
"No, you will definitely live to be 110!"
Li Jiaming knelt obsequiously before Chen Guangliang.
"None of that matters. What matters is that you two dared to disobey my orders. I'm furious."
I'm angry, really angry.
Chen Guangliang's biggest worry is that after he turns 100, even if he is still alive, he might become a woman's 'control'?
Sometimes, Chen Guangliang's worry wasn't about how long he could live, but rather how long he could remain mobile and clear-headed.
It is a tragedy to be confined to a wheelchair and at the mercy of a woman.
Of course, a man remains a boy until death—"What about those young nurses?"
Soon, Li Jiaxin and Li Jiaming were licking the 'Angry Sky' when Wu Guofang walked in without any hesitation, carrying fine wine and snacks.
"You know about this?"
"Yes. Don't worry, we will definitely educate our child well."
Chen Guangliang snorted coldly and indeed picked up his wine glass.
"Why don't you go change your clothes and try it on?"
"Ah, wait a minute!"
a few days later.
Chen Guangliang forgot about being tricked by Li Jiaxin and Li Jiaming. After all, they only had one child, and it seemed unfair to Li Jiaxin.
If I had known, I should have done it in 1992, otherwise it would have been five years late.
However, at first, Li Jiaxin cared a lot about her appearance and did not necessarily want a second child.
Early November.
Discovery Bay, a villa area belonging to the Chan family.
Although this place belongs to the Chen family, it is generally used as a vacation spot, so it has always been relatively quiet.
On this day, Chen Guangliang's 11 sons flew from all over the world to Hong Kong, heading straight to the Chen family villa area in Discovery Bay.
The family meeting room in the basement.
Chen Guangliang and his 11 sons sat down around the conference table. All 11 sons knew that there was something important to announce.
“I plan to have the family office invest HK$1000 billion over the next five years to purchase physical gold and store it in various locations around the world, with 50% of it in Hong Kong. This gold will become one of our family’s ‘foundation’.”
Upon hearing this, the 11 sons immediately became interested, but none of them had any questions.
Chen Wenhua, from the second wife's family, spoke first: "Currently, the spot price of gold is around US$300 per ounce, which is equivalent to about HK$8500 million per ton of gold. That means our family will need to purchase at least 1100 tons of gold in the next five years."
Chen Wensheng, the eldest son of the family, said, "Hong Kong currently imports 300 tons of gold per year. According to our target, our family office needs to purchase more than 100 tons of gold in Hong Kong every year. We have many channels, including banks, jewelry stores, and trading companies, which can be used for diversified procurement. In addition, there are some special channels to minimize the impact."
Chen Wenjie said, "Hong Kong will account for 50%, Singapore for 5%, which is another key focus for our family in Asia. Zurich will also account for 5%, the UK for 5%, and New York for 5%, that's 70%. The remaining 30% can be considered for some offshore centers or politically stable cities, like..."
Soon, the 11 sons came up with a fairly detailed plan for purchasing and storing the goods.
"What about funding? The family office doesn't have that much cash on hand right now."
"Father, don't worry, we will take care of the funding. It will be enough if all the branches of the family pool their money together."
Everyone nodded in agreement. They were all worth hundreds of billions, and each of them could easily contribute 100 billion Hong Kong dollars.
Chen Guangliang smiled and said, "Then you can figure out the funding for the planned purchases each year yourselves. But I don't think it'll be a big problem. I expect the internet to reach its peak in late 1999 and early 2000, at which point the family office will cash out a lot of money. Anyway, let's try to avoid you having to spend any money!"
“Father, these are minor issues. Since it concerns the foundation of our family, it is only right that we contribute, especially since it is we and our descendants who will benefit from it.”
Chen Guangliang nodded and said nothing more. In any case, his 11 sons would handle and negotiate the family office matters.
Currently, these 11 sons are the 'permanent directors' of the family office, and they can vote on any differing opinions. If any son dies, his eldest son or preferred heir will take his place.
Of course, the permanent council is also subject to the restriction of a 'family members' voting meeting', but such a situation is almost never encountered.
“You individuals don’t need to hold physical gold reserves anymore, since this kind of investment is a ‘strategic long-term investment.’ There are so many projects around the world, you have plenty of opportunities.”
"Understood, Father."
Chen Guangliang nodded. Gold, stocks, equity, land, and property are all investments, as long as the political situation in a region is stable.
Of course, his small family office, once cashed out from the internet, will also purchase 120 tons of gold as a legacy. (End of Chapter)