Chapter 33: Shorting the Hong Kong Stock Index

Time passed quickly, and in the blink of an eye, Zhou Ming and Lin Muqing had been in Hong Kong for over a month. During this time, Lin Muqing had been studying obsessively. She even enrolled in a short-term class at Hong Kong University, pushing herself to meet the goals Zhou Ming had set for her. As for Zhou Ming, he spent each day watching the calendar, waiting for the right moment to arrive.

With a rip, Zhou Ming tore off a page from the calendar, looked at the date, and sighed, "The day has finally come."

"What? What day is it? Is today a special day?" Lin Muqing's voice came from behind. Zhou Ming turned to see Lin Muqing bringing him breakfast on a tray.

Lin Muqing had fully adapted to the urban lifestyle of Hong Kong. Dressed in a shirt, skirt, and high heels, she looked every bit the city professional. Zhou Ming looked her up and down and said, "Muqing, you're becoming more like my housekeeper."

Lin Muqing smiled charmingly, "Is that so? But if you don't want your housekeeper to pour a cup of milk on your head, you'd better come and eat your breakfast quickly."

"Okay." Zhou Ming obediently sat down to eat.

"Zhou Ming, you said you have something important to do today. Is this the business opportunity you've been waiting for?" Lin Muqing asked while peeling an egg for him.

Zhou Ming took the egg and nodded, "Yes, as long as nothing major disrupts the world, the opportunity I've been waiting for is today. Or you could say today is the day to maximize profits."

Lin Muqing pondered for a moment and then expressed her concern, "But Zhou Ming, the global economic situation has been generally good recently. Especially since President Logan took office in the U.S., his economic policies have solved the stagflation problem that plagued the U.S. economy since World War II, leading to rapid development. I find it hard to imagine any unexpected events."

"Muqing, you've analyzed it very well. No wonder you're the smartest and most capable beauty at Hong Kong University!" Zhou Ming clapped and praised Lin Muqing. Since she enrolled in the short-term class at Hong Kong University, Zhou Ming had continually praised her beauty and intelligence, noting that she had quickly grasped the basic rules of the financial market within less than half a month and could now help him analyze the situation.

Lin Muqing blushed and gave Zhou Ming a sideways glance, "What do you mean 'beauty'? I'm already past that age."

Zhou Ming disagreed, "What age? In my eyes, you're at your most charming right now!"

Lin Muqing hurriedly changed the topic, "Alright, enough of that. Let's talk about your financial strategy."

Zhou Ming stopped joking and said seriously, "Actually, Muqing, your analysis is correct. Since President Logan's new economic policies took effect, the U.S. economy has indeed reached a new peak. On the surface, it seems that way, but there are hidden issues below the surface that we cannot see. Do you really think the U.S. economy is as prosperous as it appears?"

...

Zhou Ming and Lin Muqing went to their favorite café and chose a table by the window. Soon, Wang Yunlong arrived in a hurry.

Before Wang Yunlong could sit down, he apologized to Zhou Ming, "Mr. Zhou, I'm sorry for being late. The company had a meeting, and I kept you waiting."

Zhou Ming waved his hand to dismiss the apology and then ordered a coffee for Wang Yunlong before saying, "I asked you here today because I need you to sell all the stocks I currently hold. I want to withdraw all my funds."

This request left Wang Yunlong stunned. He asked, "Did I make any mistakes? Was there something wrong with my operations?"

"No, you did well. Don't misunderstand, I just have other uses for the funds," Zhou Ming explained.

Wang Yunlong then recalled something, "Mr. Zhou, are you planning to start trading futures?"

Zhou Ming smiled, "You're quick to catch on. I am indeed starting futures trading. I plan to short the Hong Kong stock index."

"Hong Kong stock index futures have only been available for trading since last year. It's impressive that you're aware of this new futures model," Wang Yunlong said, then continued, "But shorting the Hong Kong stock index? Do you believe the Hong Kong stock market will decline?"

Zhou Ming nodded, "Yes, and not just a small drop, but a significant and widespread decline."

Wang Yunlong was very surprised by Zhou Ming's judgment, "Mr. Zhou, I don't know where you got this information, but currently, the Hong Kong stock market is in a strong upward phase, and a decline is unlikely. As your client manager, I don't agree with your decision to withdraw all funds. I believe you could still make more money if you continue investing in stocks. Please trust me; I'm not saying this just to keep your money in the securities account."

Lin Muqing interjected, "Manager Wang, we have trusted you during this month of cooperation, so please trust us as well."

Zhou Ming added, "It's because I trust and respect you that I'm discussing this with you. Otherwise, I would have made the decision about my account funds myself. Don't you agree?"

Wang Yunlong became somewhat displeased, "Mr. Zhou, are you questioning my professionalism?"

Lin Muqing looked at Zhou Ming in surprise, not understanding why he was speaking so sternly to Wang Yunlong.

"I'm not questioning your professionalism; it's just that your perspective is too narrow, and you're missing some things," Zhou Ming said.

"I don't understand what I might have missed. Is there a plan for the mainland to attack Hong Kong, or has a consortium in Hong Kong gone bankrupt?" Wang Yunlong asked.

"I don't want to explain further, but I'd like to make a bet with you, Manager Wang. If the Hong Kong stock index falls as I predict, I win. In that case, you will work as my trader, and if I start a fund in the future, you will also manage it without interfering with my decisions. If the Hong Kong stock index continues to rise, then I lose. I'll entrust all my funds to you and follow your advice completely." Zhou Ming looked at Wang Yunlong with a meaningful expression, "So, what do you say? Are you willing to take this bet?"

"Alright." Wang Yunlong immediately agreed, "Since Mr. Zhou is interested, I'll take this bet with you!"

...

Leaving the café, Lin Muqing teased Zhou Ming, "Zhou Ming, you're too mischievous. You've set up a trap for Wang Yunlong, and whether he wins or loses, he'll end up working for you."

Zhou Ming laughed heartily. He knew that Lin Muqing, with her perceptive nature, had seen through his little trick. In reality, while it might sound different, the bet on whether Wang Yunlong would end up managing his trades or funds was essentially the same thing. Lin Muqing's comment was right; Zhou Ming had indeed set up a trap for Wang Yunlong.

However, Zhou Ming took pride in this, saying, "Muqing, you're wrong. Manager Wang is supposed to become the stock god of Hong Kong. I'm just helping him."

"Stop being so full of yourself!" Lin Muqing gave Zhou Ming a sideways glance but was still pleased with his confidence.

Zhou Ming and Lin Muqing arrived at Fenghui Futures Company and met with Sun Wei, Wang Yunlong's friend who was handling their account.

Sun Wei had seen Zhou Ming and Lin Muqing before, but Lin Muqing's beauty still amazed him, especially in her white-collar outfit. He couldn't help but swallow.

After a while, Sun Wei managed to pull his gaze away from Lin Muqing and invited them into his office. He poured them water and said, "Mr. Zhou, Miss Lin, hello. After a month, I believe you've gained some understanding of the futures market in Hong Kong. Are you here today to start trading futures?"

Zhou Ming nodded, "Yes, I plan to trade Hong Kong stock index futures."

"Really? The Hong Kong stock index futures contract was only introduced last year. It's impressive that Mr. Zhou, as a mainlander, is aware of this new futures model," Sun Wei said. 

Over the past month, Wang Yunlong had lost the air of superiority that some Hong Kong people had towards mainlanders, no longer looking down on them. However, Sun Wei, who had interacted with them less, still held a typical attitude, viewing mainlanders as less sophisticated.

Lin Muqing frowned, "Manager Sun, please mind your words. The mainland is not as backward as you might think."

Having been in Hong Kong for a month, Lin Muqing's appearance and mannerisms were indistinguishable from those of Hong Kong professionals. Sun Wei quickly apologized, "I'm sorry for my inappropriate remarks. However, compared to the relatively closed mainland, people like Mr. Zhou and Miss Lin are still rare."

Annoyed by Sun Wei's continuous glances at Lin Muqing, Zhou Ming said, "Manager Sun, how mainland people are doesn't concern you. Both Muqing and I are from the mainland, but now we want to trade futures."

"Understood. The Hong Kong stock index futures are different from other futures trades. Currently, the margin for one contract is around 10,000 Hong Kong dollars. How many contracts do you plan to trade?" Sun Wei asked.

Zhou Ming held up five fingers

, "Fifty-two contracts, all short. I expect the Hong Kong stock index to drop."

"Mr. Zhou, did I not make myself clear, or did you not understand? I said the margin for one contract is 10,000 Hong Kong dollars. If you want to short fifty-two contracts, you will need at least 520,000 Hong Kong dollars. That's not a small amount," Sun Wei said. "Moreover, the Hong Kong stock index is currently on the rise, with no sign of a downturn. If you short fifty-two contracts, you'll likely lose everything within a week."

"It's not like the Hong Kong stock index is under your control. I believe it will drop, and it will be a steep decline," Zhou Ming said.