"Bao‑ge, it's falling again!" "Bao‑ge, it's almost at HK$3!" "Bao‑ge, do you think it can hold?" "Should we sell or keep holding?"
Hutchison Whampoa's stock kept dropping. In the trading hall, everyone holding shares was nervous, restless, and debating anxiously.
"I'll add another position, bet on a rebound, and lower my cost," Chen BaoCai said firmly to his companions.
Yesterday he had bought HK$80,000 worth of shares at HK$5.23. When the price opened lower this morning, he couldn't escape. As it fell further, he decided to hold.
When the price neared HK$3, he gritted his teeth and bought another HK$40,000 at HK$3.03. The stock did rebound. When it rose above HK$4, he sold that HK$40,000 batch, lowering his average cost to HK$4.35.
Now he still held HK$80,000 worth at HK$4.35, down nearly 30% — a loss of over HK$20,000.
Because of the earlier HK$40,000 trade, he wanted to gamble again, hoping for another rebound above HK$4 to sell and reduce costs further. He believed Hutchison's plunge was just panic, not fundamentals. If he held long enough, it would recover.
"I'll stick with Bao‑ge!" "Right, let's bet on another rebound!" "I'm already all‑in, I won't cut now."
Some followed him, others, already fully invested, did not.
They placed advance buy orders at HK$3.03 while the price was HK$3.08. Such orders wouldn't execute until the price hit HK$3.03.
"Look, it's at HK$3!" "A huge sell order hit!" "But HK$3 held, it didn't break!"
Soon, as the price fell from HK$3.05 to HK$3.00, a massive sell order wiped out all bids in between. Yet HK$3 held — strong support.
That support was no accident. Lin BaoCheng and Shen Zhou had agreed by phone: each placed HK$10 million in buy orders at HK$3 to hold the line. They didn't place more because advance orders tied up real cash, immobilizing funds.
The huge sell order came from Bob's group. They dumped HK$10 million at HK$3, but failed to break it.
Seeing this, they tried another HK$10 million. Still no change.
By then, they realized buy orders were waiting at HK$3. But trapped, they had to break it, or their futures settlement would fail.
So they hit with another HK$10 million. This time, HK$3 broke.
With another HK$10 million borrowed shares, they planned to keep selling whenever resistance appeared, to crush the price.
The HK$20 million support at HK$3 worried Feng JinXi. He suggested settling shorts now at HK$3 strike, to weaken longs' rebound hopes and force them to settle.
After HK$3 broke, the price kept falling. In the options market, shorts offered settlement at HK$3. Many longs accepted, cutting losses of 50%. Afraid of worse, they sold.
Iwasaki FengLong, watching closely, noticed the falling price and settlements. He called Lin BaoCheng:
"Lin, the price broke HK$3. Shorts are settling. They're retreating."
"I recall they opened shorts at HK$6. Over HK$100 million was taken by others. Settling now still earns them tens of millions. But the bulk — over HK$200 million — is with us. We won't settle. They'll suffer huge losses," Lin calculated.
"Forget them. Let them settle. We'll keep buying at lower prices, reduce our costs further," Lin said.
He actually wanted to crush them completely, driving the price to HK$5 or HK$6. But his own funds were limited. Cooperation with Iwasaki mattered. Forcing Iwasaki to lift the price would hurt his profits, damaging future partnership.
So, with over HK$200 million in longs, shorts were doomed to heavy losses. Lin decided to let them bleed, while he bought more cheaply.
"Good. Let's press the advantage," Iwasaki agreed. He ordered traders to keep buying and absorb all shorts in the options market.
Lin didn't lift the price, and HSBC wouldn't either. HSBC wasn't trading options, and lower prices meant cheaper buys — good for them.
Thus, the stock kept falling. Some investors cut losses, others bottom‑fished, while Lin and allies steadily accumulated.
Without Lin pushing up, Li JiaCheng's group settled shorts smoothly. As the price fell, more longs panicked and closed at HK$3 strike.
Watching their accounts swell, Li JiaCheng, Feng JinXi, Niu BiJian, and Bob were delighted. Their shorting had earned 50% profit. Each pocketed tens of millions.