Chapter 477 - 219: Beating a Cornered Dog

Chapter 477: Chapter 219: Beating a Cornered Dog

Typically, the Hong Kong stock market closes for about four and a half days during the Spring Festival.

Therefore, on the third day of the Lunar New Year, the Hong Kong stock market reopened for trading.

On that very day, Quantum Fund first used its overseas channels to secretly release some good news, rapidly inflating the stock price before quickly selling off its holdings.

Zhong Liwen of New Century Fund, who was also closely watching Quantum Fund, began selling off his shares in batches at almost the same time. He gradually offloaded the 17.6% stake he had previously acquired at a low price.

This continued for nearly a week.

「Until the tenth day of the Lunar New Year.」

Inside Xinya Bank’s offices in the Bank of China building.

Its chairman, Li Linqi, and several other major shareholders had received an inquiry from the Xiangjiang Securities and Exchange Commission that morning regarding the recent stock price surge.

The letter demanded they explain the news that had come from overseas on the third day of the new year. If the news was real, they were to disclose the details; if it was false, they had to clarify the facts as soon as possible to prevent losses for investors.

A complicated look flickered in the depths of one shareholder’s eyes, but he chose to remain silent.

’Better you than me.’ After all, his overseas account had already received the money from Quantum Fund. Even if he dumped the Xinya Bank shares he now held at a low price, he wouldn’t suffer any loss.

Just then, a secretary hurried into the room.

"Chairman, this is bad! Take a look at this..."

Lin Qi’s brow furrowed. He knew his secretary’s personality; the man was always composed. For him to rush in without even knocking, the situation was clearly urgent.

Snatching the newspaper, Lin Qi glanced at it, and his expression turned grim. The headline blared:

[Yadong Bank Commits Financial Fraud...]

His face turned ashen as he stared at the data in the newspaper, which was accurate down to the last detail. He clenched his fists and glared at the six major shareholders present. "Who leaked the details of the Kafei Company acquisition?"

"What?"

"The Kafei acquisition was leaked?"

"Old Lin, you know me. We’re all in the same boat. How could I possibly reveal such a secret to an outsider?"

"That’s right!"

"Could it have been someone from Kafei Company who leaked it?"

A storm of emotions crossed Lin Qi’s face.

One of the directors had already opened his laptop. Sure enough, he saw that their company’s stock had started to plummet less than half an hour after the market opened. It had already dropped nearly five points while they were in the meeting.

"Old Lin, what do we do now?"

Faced with the other directors’ anxious questions, Lin Qi’s brow tightened. He knew the only solution now was to start buying back shares as quickly as possible. But he also knew the Kafei Company acquisition was real, and it would never withstand a thorough investigation by the Securities and Exchange Commission.

In other words, if they announced a share buyback now, he and the other board members would be in trouble once the Commission completed its investigation in a few days.

But not buying back shares would be a tacit admission that the media reports were true.

It was merely a choice between a quick death and a slow one.

Taking a deep breath, Lin Qi ordered, "Ah Ming, issue a statement immediately. Say the news reports are pure rumor and urge investors to be rational."

The secretary nodded grimly. "Yes, Chairman. I’ll issue the statement right away."

What they didn’t know was that the shareholder who had placed his stock in trust, along with Quantum Fund and New Century Fund, were already using a variety of accounts to accelerate the sell-off of their shares. At the same time, they were all shorting Xinya Bank.

When other institutions in the Hong Kong financial market saw the sudden surge in short-selling pressure on Xinya Bank—with short positions several times the size of the sell-off volume flooding in—they also jumped into the fray, beginning to short the stock in smaller amounts.

Furthermore, the prior Kafei Company acquisition had already drawn intense scrutiny from many financial institutions and the Xiangjiang Securities and Exchange Commission.

Although investors regained a bit of composure after seeing Xinya Bank’s announcement, the selling pressure continued to mount. As the short-sellers’ power grew and Xinya Bank still hadn’t announced a buyback plan, investors began to lose their nerve and joined the sell-off.

At noon, two other major Hong Kong newspapers also reported on the matter on their websites. They presented information provided by "inside sources," further confirming the allegations of financial fraud at Xinya Bank and various issues with the Kafei Company acquisition.

When the market opened in the afternoon, Xinya Bank’s stock plummeted again. By the day’s close, the bank, which once had a peak market capitalization of 32.2 billion Hong Kong Dollars, had seen its value drop by nearly 44%, leaving it with a market cap of just 18.032 billion Hong Kong Dollars.

The Xiangjiang Securities and Exchange Commission and the Banking Regulatory Commission held an emergency meeting overnight, demanding that Xinya Bank submit to an investigation and questioning.

However, just then, one of the major shareholders had secretly boarded a plane and fled that afternoon. This was the mole who had been coerced by Quantum Fund.

The next day, when Lin Qi and the others were preparing to deal with the Securities and Exchange Commission, they discovered that the man had vanished without a trace.

While Lin Qi and his team were under investigation, Xinya Bank’s stock continued its freefall. With more rumors circulating, the Xiangjiang Securities and Exchange Commission had no choice but to urgently suspend trading of Xinya Bank’s stock that afternoon.

Before the trading halt, Xinya Bank’s stock had lost another seven billion-plus in value, leaving its market capitalization at only 10.6 billion Hong Kong Dollars.

Quantum Fund had already raked in nearly eight billion Hong Kong Dollars in profit from this short-selling operation.

But behind the scenes, New Century Fund had also earned 3.3 billion and had even increased its shareholding back up to a high of 18.6%.

However, New Century Fund was holding its fire.

Zhong Liwen, intimately familiar with the Hong Kong stock market, knew exactly what fate awaited Xinya Bank. He also knew that Quantum Fund and its accomplices were sharpening their knives, ready for the kill.