Reinventing the Millennium

In August and a half, listed company Yike held a press conference at the Hang Lung Building in Shanghai.

On this day, not only several mainstream media and almost all influential financial media in the mainland, but also Internet news media such as Sina, NetEase, Sohu, and Penguin, as well as two media in Hong Kong and two media in the United States, came to the scene.

It was just a corporate press conference, but the event was unprecedented.

After all, this is the first stock shorted by a mainland company in the U.S. stock market, which has record-breaking historical significance. Regardless of the result or not, "short selling" will probably be mentioned in the future when talking about it.

Moreover, Lehman Brothers issued two short-selling reports in a row. It would have been anyone else, but its short-selling targets were also well-known in certain circles in China.

Yike's current electronic products still have quality assurance in the mainland. However, Chinese consumers have no hard demand for iMusic and simply have a dazzling array of choices in hardware products.

To everyone, Yike is more labeled as Fang Zhuo, the richest man in the Mainland.

Lehman shorted Yike, which meant shorting Fangzhuo.

At 8:30 in the morning, the conference hall on the 21st floor of Hang Lung Tower was already overcrowded.

At this time, you can see the difference between closeness and distance.

Apart from the major newspapers, there is only one online media, Sina, with the best seats in the first row.

In addition, many people present also serve as Zhihu's front-line experience officers in addition to being reporters. This is easier to operate as you sit in the back. Some reporters sitting next to each other saw the Zhihu pages browsing on each other's laptops and couldn't help but Looking at each other and smiling, we feel close to each other.

——What do you think about Yike being shorted by Lehman Brothers?

——If you were the chairman of Yike, how would you handle this matter?

To this day, Zhihu still adopts an invitation system, but the fission speed is somewhat unexpectedly fast, and this Q\u0026A community has gradually gained some fame on the Chinese Internet.

It is precisely because the user groups formed in this way have certain status and capabilities in all walks of life, and one thing they often do is to give advice.

Last time, the famous Mr. Dahuang account ban incident was because he broke the defense after being pointed out by various people. This time, the person who was pointed out became Mr. Fang. Considering that Gome was "short-sold" last time, this time also Considered by many to be retributive displeasure.

Generally speaking, answers such as "more detailed data", "rational communication with Lehman", "scientific methods of short selling", "correcting if there is any, and encouraging others" have become the mainstream answers to the questions.

At nine o'clock, Fang Zhuo walked into the conference hall with a smile on his face. The atmosphere at the scene suddenly became quiet, followed by a flash of "click".

"It's time, and it looks like everyone is here. The weather has been really hot in the past few days. Thank you everyone for taking the trouble to make this trip."

Fang Zhuo waved his hand and held the pose for two seconds with great experience, giving everyone material for taking pictures.

It will definitely be photographed anyway, and of course it will leave everyone with a better view.

He only made a few commonplace remarks and immediately got to the point: "I was quite surprised that Lehman was shorting Yike. Many friends also called me out of surprise and concern. I still have to say thank you here today."

"But from a company and market perspective, I think Yike's current share price has proven everyone's views on Yike and Lehman."

"Compared to the day of the short-selling report, Yike's stock price has fallen by 3% today."

Fang Zhuo pursed his lips and said solemnly: "I think this drop is somewhat disrespectful to Lehman. Considering the extent of public opinion's attention to this matter, it also feels a little sorry for everyone's enthusiasm."

He shrugged and smiled helplessly: "The market has proven that the global sales of music players have increased from 1.2 million → 5 million → 25 million → this year's expected 41 million. Such an increase is recognized by everyone, and it is not just based on thunder. Man can be wiped out with just one report, so it’s strange for me to sit here today. The sales volume and stock price are here, what else do I need to respond to?”

Fang Zhuo spoke eloquently and looked around: "But since there is such a press conference, let's talk according to Lehman's logic first."

With these words, the key points of the Lehman short report were displayed on the projection screen.

The first is the performance of the Chinese market, the second is the fierce competition with friends, and the third is the bleak prospects of new mobile phone business.

Fang Zhuo raised his index finger and said simply: "The performance of the Chinese market cannot be attributed to one company, Yike. The product sales I just mentioned did not include the domestic market. The performance of the stock price is based on the global market." of constant growth.”

He pondered for a moment: "Because our friend Apple has been spreading news about mobile phone projects, the second and third items will be discussed together."

"Yike has never been afraid of fierce competition. If he was afraid of this in the first place, how could he have the courage to challenge Sony?"

"On the contrary, it was fierce competition that transformed Yike. I have always been very proud of this."

"However, there are many factors related to the success or failure of the project. Lehman and I have different judgments. Lehman's eyes are the market share and status of mobile phones such as Nokia, Blackberry, Samsung, and Sony Ericsson. My judgment is that this market needs a Field intelligence innovation.”

When Fang Zhuo said this, he suddenly stood up and invited the three middle-aged people sitting next to him in the first row.

Some reporters at the scene knew these three people, and without waiting for Mr. Fang's introduction, they informed their colleagues of the identities of the deputy general managers of China Mobile, China Telecom and China Unicom.

Fang Zhuo introduced the identities of the three guests one by one in a low-pitched discussion environment.

Then he said: "When Yike builds mobile phones, it is by no means a random new business to fool investors. We are actively working with excellent partners to promote the progress of the mobile phone business. Today I am taking this opportunity to announce something. .”

Fang Zhuo spoke out about the decision that Google has not yet announced but is about to announce: "China Mobile, China Telecom, and China Unicom will jointly form an open mobile phone alliance with Google, including Yike, Bingxin, and Android. Committed to developing a smartphone system named 'Android' to significantly reduce the development and promotion costs of mobile devices and services."

There was some commotion in the conference hall. Why did it suddenly come here?

Open Handset Alliance? Three domestic operators?

If we just talk about Yike and Google, it still sounds unreliable.

However, the three major domestic operators have come together. This gesture of support at least proves that Yike or Mr. Fang has strong resource support in the country. Similarly, the operators may not support one casually. Unreliable stuff.

However, everyone is still a little confused, smart phone system? Is the current mobile phone system not smart enough? Where to put Symbian?

After Fang Zhuo made the announcement, he handed over the microphone to the top executives of domestic operators and asked them to talk about this cooperation with Google.

This is a recent advancement.

At the same time, just as Apple took stock of the situation and changed its publicity strategy, and began to gradually reveal mobile phone news, although Yike still has many problems that have not been solved, it does not prevent it from releasing good news.

According to Fang Zhuo's plan, if it doesn't work out, the prototype can be released first next year. The sales interval will be longer, and a brand image must be established first.

The descriptions given by the deputy general managers of the three operators were relatively boring, and they were generally about cooperation. Their visit was a bit of a friendly show of support, and some parts of it were not business considerations, but personal relationships with Mr. Fang.

When Fang Zhuo saw these three people finished speaking, he was still confused, knowing that it would not be something that could be explained clearly in a short while.

He took the microphone again and said something that was easy to understand: "China Mobile, China Unicom, and China Telecom are excellent partners. Yike has excellent market experience. Did I just say Bingxin? Bingxin is negotiating with Qualcomm." Cooperation, in addition, Yike has obtained Sony’s patent authorization for mobile phones.”

"What I want to say is that Lehman believes that Yike's prospects for making mobile phones are bleak, but we are gathering excellent partners and trying to build a system of competition, rather than a local battle between companies."

"I don't know whether Lehman has conducted enough research, or I'm not sure whether Lehman has the ability to judge the merits of this kind of competition."

"But I am very confident. Just as a few years ago I believed that music players combined with the Internet are the choice of the next era, now, I also believe that sufficiently open systems and sufficiently intelligent mobile phones are inevitable in the greater era. .”

"China Mobile, China Unicom, Telecom, Yike, Bingxin, Google, Android, Sony and more potential partners such as TI, are these industry trends that only Lehman can judge?"

"How many...how many first-class practitioners does Lehman have?"

"What qualifications does it have to issue such a report opinion?"

Fang Zhuo showed a contemptuous smile.

The Sina reporter in the first row immediately pressed the shutter, causing other reporters to subconsciously follow suit.

A few seconds later, Fang Zhuo ended his photo taking gesture, took a sip of water, and continued: "Lehman Brothers has the status of a Wall Street investment bank, and this is the first time a mainland company has experienced short selling. I can understand everyone's surprise and concern. In fact, The financial performance of our Yike company is included in the regularly released financial reports, and the prospects of the mobile phone project will also be announced in a timely manner in the days to come."

He paused: "Let's talk about Lehman's short selling action. Such behavior is not uncommon in the U.S. financial market. Yike neither suspended trading nor fell by 30 to 40%. I think Lehman should have already Realizing their error in judgment, they should stop immediately, which is what a mature company would do."

"But I have serious doubts about whether Lehman was a mature and responsible investment bank."

Fang Zhuo said lightly: "Lehman Brothers has never had any communication with Yike. I wonder if its short selling behavior is related to the dispute between me and Lehman President Fuld."

"There are also reporters from Bloomberg and Wall Street in the United States today. I hope you can report my views truthfully."

"I still maintain that Lehman Brothers acted irrationally in the financial markets."

Today, Mr. Fang spoke at a slow pace, telling all kinds of information one by one, barely leaving reporters with much time to think. However, everyone couldn't help but perk up when they heard Mr. Fang start to find fault.

Mr. Fang just said that Lehman was not qualified to judge mobile phone projects, but now when we talk about the financial market, how can Mr. Fang judge the business of an established investment bank?

Fang Zhuo looked at everyone's eyes and was very happy that he had finally reached his favorite part.

He snapped his fingers, and the secretary immediately switched the projection to the prepared PPT.

1. The performance of U.S. housing prices since June this year.

2. Lehman Brothers’ CDO contract.

3. _________.

Only two of the three projected points have clear titles.

Fang Zhuo did not explain the third point, but talked about the housing prices of the first point: "To talk about Lehman, we have to start with U.S. housing prices. To put it simply, after the Federal Reserve's continuous interest rate hikes, I think U.S. housing prices have ushered in a new era. inflection point."

The PPT is updated in a timely manner and plays out the data to be discussed.

"Everyone looks at the screen. Standard \u0026 Poor's knows that its Case-Shiller housing price index is a measure of changes in U.S. housing prices. Since entering the second half of the year, housing prices in 18 of the 20 largest cities have increased compared with the previous quarter. All have declined.”

"House prices in nine more major cities are already lower than at the beginning of the year."

"Do you know what this means?"

"In the past six years, the average increase in U.S. home prices has exceeded 11%."

"With this situation in the second half of this year, there is no doubt that its housing prices have reached a worrying turning point."

After Fang Zhuo said this, he also included data other than S\u0026P to support his point of view.

Today's press conference is in the East, in China, in Shanghai, not in New York or the United States. He doesn't think his words can change the long-standing problems in the U.S. real estate and subprime debt markets. It's better to talk about the situation in foreign countries. Feeling good.

When some data is released, the argument about the inflection point of housing prices is over.

Fang Zhuo started to talk about the second point: "CDO is a collateralized debt obligation. Everyone may not be very familiar with this, because our financial market has almost no involvement in this aspect, but its performance is crucial."

Most reporters in the conference hall were at a loss.

What is a CDO? What's the point of being here?

You can't blame them for behaving like this.

The domestic market cannot keep up with the prosperity of financial innovation in the United States. At the end of 2005 last year, the China Development Bank launched the first debt asset securitization project. It was a small first step in trying CDO. Most practitioners did not listen at all. However, I don’t care about the situation in the American market thousands of miles away.

What really made CDOs famous was the financial crisis that followed.

Fang Zhuo briefly introduced the key points: "CDO packages a certain number of subprime mortgage businesses together. For example, 1,000 subprime loans in different cities are selected, packaged and bundled into a portfolio, and divided into several levels. The highest level is called priority."

“The definition of this priority is to have the highest default immunity. For example, the first 10% defaults in this portfolio do not require the holders of the priority to bear losses. Correspondingly, its rate of return is also the lowest in the portfolio. "

"And the lower the grade, the higher the yield."

"Because the loans in the portfolio are highly diversified, the agency calculates that the probability of seniority default is extremely low, even lower than the probability of default on U.S. Treasury bonds, so the rating is set at AAA, which makes it particularly popular in the financial market."

Fang Zhuo said: "Let's mark this AAA level first, it is very important."

After saying this, he continued: "A bunch of defective loan businesses have been packaged, and some AAA-level financial products that are not inferior to national bonds have been separated from them. Is there some problem with this logic that I always find strange?"

"Subprime loans are still subprime in the final analysis. No matter how they are mixed, packaged and separated, they are based on the U.S. real estate market. If the U.S. real estate market fluctuates, financial products based on this foundation will be at great risk because, This adds leverage."

Fang Zhuo was a little tired, took another sip of water, and said: "As far as I know, Lehman Brothers has invested a lot of energy in the CDO market. It ignored the risks brought by subprime and determined that there is still a lot of room in the real estate market. , which will inevitably lead to losses in its subsequent business.”

"So, today I still stick to the view I had in New York at that time. I am not optimistic about Lehman's future stock price performance."

An unfamiliar stream of information to digest.

Even though Mr. Fang revealed his conclusion, many people remained silent.

It was the reporter from Xiangjiang who had some understanding and the fastest response, so he questioned loudly after a few seconds: "Mr. Fang, you said you are not optimistic about Lehman. Is there any evidence for your rhetoric?"

Fang Zhuo said unexpectedly: "Didn't I show you the data from the US S\u0026P? The US itself announced that there are 400 billion to 500 billion in subprime loans. These have been transmitted to the CDO market, which has almost doubled, from an increase of 11% last year. This year's sudden decline, please judge this sudden turn, what will happen next?"

The reporter from Xiangjiang shook his head repeatedly: "Such a data combination is not rigorous, Mr. Fang, Lehman is not optimistic about Yike. It is not only bearish, but has also begun to short. This is not an exaggeration."

Since the beginning of the press conference, Mr. Fang has been talking at length. Not only the reporter from Xiangjiang, but also many people present felt that Mr. Fang always deliberately came up with a shocking conclusion to divert attention.

Fang Zhuo showed the most relaxed smile in the game and said: "What a coincidence, Lehman shorted Yike because it was not optimistic about it. I am not optimistic about Lehman now, so I also shorted Yike."

There was a lot of discussion in the conference hall after hearing such words.

Lehman is shorting Yike, and Mr. Fang is shorting Lehman? !

It sounds more like an act of anger.

"Lehman holds about 20 million U.S. dollars of short positions in Yike. As a courtesy, I also bought a short position for half a year. Let time prove it." Fang Zhuo said lightly, "Oh, yes, I just mentioned Let everyone mark the AAA rating. Due to its strong negative view on Lehman, MIGA Fund cooperates with Bank of China and will launch financial products based on Bank of China’s short position on Lehman.”

"In this kind of financial product, I set aside the AAA-level part where there is almost no loss, and the lower level is filled with my 20 million position."

The mainland could not directly short Lehman, so the Bank of China cooperated with its own company, Bank of China, in Hong Kong, and used the position of Bank of China to act as the main body of the product, completing short selling in disguise.

At the same time, in order to comply with regulations and avoid theoretical risks, Fang Zhuo's funds bear probabilistic losses. The ratings purchased by others are all AAA, that is, the priority level that does not require losses as mentioned just now.

Fang Zhuo faced the camera and smiled: "In other words, everyone is welcome to invest money to verify Lehman's business prospects."

He tapped the table with his fingers: "Who is right and who is wrong will be known at a glance. If you short Lehman, you can neither suffer losses nor be fooled."

The atmosphere in the conference hall was confused and strange, and everyone felt that things seemed to be getting interesting.

In this case... the risk is always borne by the party, and everyone can watch the excitement?

You can’t buy a loss or be fooled, but you can buy the experience of fighting side by side with the richest man in the Mainland to short Wall Street giants!