"So it seems I was overthinking."
Li JiaCheng nodded after hearing the discussion, though his mind was elsewhere.
The sudden surge of large buy orders clearly wasn't the work of retail investors or small institutions. It was likely big capital taking the opposite side. Not worrying about that was impossible. He feared this counterparty knew something they didn't — information that could ruin their short strategy.
Of the HK$400 million short position, Li's share was HK$80 million — all the funds he could muster, even after selling his Wharf shares. Without that, he couldn't have raised so much.
"If this fails…"
Calming himself, Li thought it over. Risking all his capital on shorts was too dangerous. His main goal was to strike Hutchison Whampoa and Lin BaoCheng, not simply to profit.
The plan was already in motion. Contributing less was fine — it only meant less profit. But if it failed, he would lose less. With Cangjiang Industries behind him, he could rise again. No need to gamble everything; he had to leave room.
Still, this didn't mean he thought he was wrong. All signs suggested Hutchison's long gold futures investment had lost money. Shorting should be correct.
Having already committed HK$80 million, Li would never withdraw now. As initiator, pulling back would destroy confidence. He wasn't foolish enough to do that.
His idea was: once Hutchison's stock fell below HK$6, or lower, he would buy some shares as a hedge. If the short succeeded, he'd earn more, and holding shares could give him a chance at control later, especially if Lin reduced his stake. Li coveted Hutchison, the great landlord.
If the short failed, buying shares would reduce his losses — misfortune within fortune. It wouldn't cripple him. He could still rely on Cangjiang Industries to recover.
Feng JinXi asked: "When do we act to drive Hutchison's price down? Lin BaoCheng is back in Hong Kong. Who knows what he'll do. Gold is still falling — best act now. If we wait and gold rebounds, it'll be a disaster."
Niu BiJian said gravely: "Today is Wednesday. Two trading days remain this week. Let Bob finish selling tomorrow. We'll announce tomorrow night. If we wait until Friday night, the market will be closed. More time to ferment, but more uncertainty."
Jardine held only 3% of Hutchison shares, and had already sold most. By tomorrow they'd be done. Niu wasn't worried about Jardine's holdings losing value.
"Why not announce Sunday?" Bob frowned. He still held many shares. If he didn't sell while prices were high, they'd be worth less later.
Feng reminded him: "Mr. Bob, remember you've committed HK$80 million to the short. Which matters more?"
"…I understand. We'll do as you say," Bob said reluctantly. He knew another day wouldn't let him sell much more. The short funds mattered more.
Around 11 a.m., Lin BaoCheng received a call from HSBC's Shen Zhou, inviting him to lunch to discuss something.
Lin agreed. HSBC knew the details of Hutchison's gold futures investment. He couldn't refuse Shen — better to keep relations smooth.
They met at the Peninsula Hotel, in a private room.
Shen got straight to the point: "Mr. Lin, your return to Hong Kong is related to the board meeting two days ago, and the shorting of Hutchison in the options market, isn't it?"
"Correct," Lin admitted. "Clearly someone is stirring trouble. I must stay here to oversee."
"This morning, the options market saw huge funds absorbing shorts. That was your doing, wasn't it?" Shen asked. He already knew the answer. Lin had just returned, and Hutchison's investment was profitable. To think the longs weren't his was impossible.
"You saw through me, Mr. Shen," Lin smiled, tacitly confirming.
"Mr. Lin, I won't hide it. I know Hutchison's investment is profitable — very profitable. With the Qi family, Bob, Jardine selling heavily, I've already bought a lot quietly. I don't want to miss this chance, nor cause misunderstanding. So I ask your permission for HSBC to join the game."
Lin knew Shen was being polite. If HSBC wanted to buy, he couldn't stop them. After a brief pause, he nodded: "As long as you don't recklessly buy in bulk, and after this event you sell down to no more than 10% holdings, fine."
"Agreed. HSBC's goal is profit. That's acceptable," Shen replied readily. A deal was best for all — money made together.
Shen already knew who was shorting Hutchison, and that Qi, Jardine, and Bob were selling. But he had no intention of warning them. Instead, he planned to buy heavily and profit.
Though they were all British capital, their money wasn't HSBC's. Shen had no duty to warn them. If he did, HSBC would lose profit.
Giving up a golden opportunity for a thank you? That was charity, not capitalism.
As a banker, Shen knew exactly what he should — and shouldn't — do.