boyutpedia Chapter 147: Prepare the Contract!
Chapter 147: Prepare the Contract!
Huang Xiaochuan found this information in the records of the Hong Kong Stock Exchange.
1987年10月爆发世界性股灾，日本股市不仅没有跟着美国股市崩溃，反而立即恢复元气，股价探底回升。1988年日本股市继续上涨，年底时日经指数已突破30000点。1989年日本日经指数再创新高，并在1989年12月19日达到38915点，较1985年最低点上涨了3倍多。1989年日本股票市值高达630兆日元，为当年gnp的16倍，而1985年它仅占日本gnp的60。
By December 31, 1989, the Nikkei index had reached a glorious high of 38915 points. However, in the 12s, the Japanese stock market experienced a dramatic change, with a sharp drop in prices.
By October 1990, the stock index had fallen below 20000 points.
However, in May 1991, the Nikkei index experienced a brief resurgence, surging by 3000 points in two months. According to Huang Xiaochuan's latest understanding, the Nikkei index is 22841 points.
However, in August of that year, the Nikkei index once again entered a major crash mode, plummeting to 14300 points, a drop of 63 points from its peak.
Although Huang Xiaochuan didn't know the operation mode of shorting the Nikkei index, he had spent so many years in Shanghai, known as the financial capital of China, in his previous life, that he was quite familiar with the trend of the Nikkei index in the 1980s and 1990s. There was no way around it; the clients he met and his circle of friends at the time were all talking about finance. If you didn't know some of this kind of knowledge, you would be embarrassed to strike up a conversation with them.
So Huang Xiaochuan wanted to try and see if he could profit from it, but he didn't know much about how to short the Nikkei index, so he decided to go to HSBC, where he had an account, to find out.
The service at the capitalist bank was truly impeccable. When the receptionist learned of Huang Xiaochuan's purpose, he immediately arranged for an investment manager from HSBC to receive him.
"Mr. Huang, please have a seat! My name is Min Huifen, and I am the investment manager here. This is my business card."
Wearing a well-fitting business suit, Min Huifen looked to be around thirty years old. She had an ordinary appearance but a good figure, and her attentive smile made Huang Xiaochuan feel very comfortable. This was more like it! The service industry is all about serving customers well in order to make money from them.
Huang Xiaochuan took the business card from Min Huifen, glanced at it, and smiled, "Manager Min?"
Min Huifen smiled ingratiatingly and said, "Mr. Huang, you can call me Afen. That's what my close friends call me."
Since that's the case, Huang Xiaochuan won't stand on ceremony.
"Afen, I'd like to consult you about shorting the Nikkei index."
In fact, Min Huifen already knew Huang Xiaochuan's purpose. The bank customer service representative who received him had already told her the whole situation, so when she heard Huang Xiaochuan say this again, Min Huifen already had a plan in mind.
She immediately chatted with Huang Xiaochuan about financial knowledge, specifically how banks typically short the Nikkei index.
"Mr. Huang, to short the Nikkei index, we generally achieve this by trading Nikkei index futures or options and other derivative products, rather than directly shorting the index itself. This is because directly shorting the index requires selling all the stocks that make up the index, which is almost impossible in practice. However, through the financial derivatives market, we can speculate on the overall trend of the Nikkei index with relatively little capital."
The basic steps for shorting Nikkei index futures are:
1. Open a trading account in our bank's futures trading department and deposit a certain amount of margin.
2. Choose the appropriate contract month and price to sell Nikkei index futures contracts. Here, "selling" means shorting, implying that the investor expects the Nikkei index to fall in the future.
3. If the Nikkei index falls as expected, investors can buy back the futures contracts at a lower price to close their positions and make a profit. Conversely, if the index rises, investors may face losses because they will need to buy back the contracts at a higher price to close their positions.
For example, if the current Nikkei index futures price is 23000 points, and Mr. Huang expects the Nikkei index to fall within the next month, you can choose to sell a one-month Nikkei index futures contract. One month later, if the index falls to 22000 points, the investor can buy back the contract to close the position and profit from the price difference.
"Besides futures, Mr. Huang can also short the Nikkei index by purchasing put options. Put options give investors like Mr. Huang the right to sell the Nikkei index at a specific price on a future date. If the index falls, the value of the put option will rise, and investors can profit by exercising the option or selling it on the market."
Min Huifen used professional terminology to explain to Huang Xiaochuan two methods for shorting the Nikkei index.
In essence, both methods follow the same pattern. For example, Huang Xiaochuan signs an agreement with a bank, pays the bank a margin of two million yuan, borrows ten million yuan worth of Nikkei index futures or options from the bank, and then immediately sells them. However, Huang Xiaochuan cannot take this money away; it can only be kept in the bank for supervision.
Once the Nikkei index falls, the original ten million Nikkei index futures or options will only be worth five million. Then Huang Xiaochuan can use five million of the ten million in the bank to buy back the original ten million Nikkei index futures or options and return them to the bank.
In this way, Huang Xiaochuan earned a difference of five million, which now truly belonged to him. The contract was completed, and the bank returned Huang Xiaochuan's deposit. Of course, the bank also charged Huang Xiaochuan a handling fee.
However, since it's possible to make money, there's also a high probability that you might lose money.
If the ten million yuan that Huang Xiaochuan lent to short the Nikkei index futures or options rises, and once it reaches twelve million yuan, then in order to protect itself from losses, the bank will use Huang Xiaochuan's two million yuan margin and the ten million yuan to buy back the futures or index futures. This is called liquidating the position.
Or the bank might just do nothing and watch, but before the contract expires, Huang Xiaochuan will have to buy back these options or futures at a higher price on the market to return them to the bank, which would result in a huge loss for Huang Xiaochuan.
The bank will not suffer any losses; the only one who will lose is Huang Xiaochuan. If the leverage were any larger, a fluctuation of just a few percentage points could trigger a margin call, leaving Huang Xiaochuan with a mountain of debt from which he could never recover.
After understanding the situation, Huang Xiaochuan quickly calculated in his mind that he currently had about HK$2.8 million available for use, since he needed to reserve some for company operations.
Furthermore, he needed to recall the exact time of the Nikkei index's second major plunge. If he remembered it wrong, it would be disastrous! Not only could he lose all 2.8 million, but he might also have to pay the bank a large sum of money.
After thinking it over, Huang Xiaochuan asked, "Afen, could you please calculate for me the maximum leverage I can use?"
Min Huifen quickly checked Huang Xiaochuan's account balance on the computer and then told him, "Mr. Huang, based on the amount in your account, our bank can provide you with a leverage of fifty times."
Huang Xiaochuan did some mental calculations. If the margin was two million, then a 50x leverage would require borrowing 100 million worth of Nikkei index futures contracts from the bank, which would be equivalent to his own margin of 2. This was indeed a bit risky; a single market fluctuation could wipe out his two million.
Twenty times leverage seems more reliable. With that in mind, Huang Xiaochuan said to Min Huifen, "Two million Hong Kong dollars, twenty times leverage."
Min Huifen glanced at the handsome young man sitting opposite her and sighed regretfully. What a pity! Has this young man gone mad? The Nikkei index is rebounding across the board, and the market is optimistic. How could he possibly short the Nikkei index?
However, she didn't stop working. Soon she told Huang Xiaochuan, "Mr. Huang, your 20x leverage is 40 million Hong Kong dollars. Your 2 million will be used as margin. If the Nikkei index rises close to 5%, then our bank has the right to ask you to increase your margin. If you do not increase your margin, we will force you to liquidate your position."
Huang Xiaochuan nodded to indicate that he understood: "Afen, you can prepare the contract now!"
Min Huifen replied with a beaming smile, "Okay, Mr. Huang, I'll prepare it for you right away."
Regardless, this contract will allow the bank and Min Huifen to earn substantial commissions. As for whether Huang Xiaochuan will make a profit or a loss, that depends on his luck.
However, little did Min Huifen know that the handsome young man sitting opposite her had already seen the hole cards, meaning he had seen everything on the table. However, he did not use the maximum leverage for the sake of caution, otherwise the future gains would have been even more astonishing to Min Huifen.