Chapter 67: Ten-Fold Leverage

"Very well, since the boss insists on doing this, then I will certainly cooperate with full effort!"

Luan Weiliang nodded earnestly.

Afterwards, the group of them finished lunch and headed directly to the Kyoto Stock Exchange.

Before they arrived, they had already sent an employee to handle the tedious procedures such as opening an account; next, they only needed to sign a securities lending contract with the brokerage to enable leverage and begin shorting the stocks of the three major automobile companies.

So-called shorting, in stock trading terminology, is the opposite of going long; going long is buying stocks, while shorting is selling stocks.

Among these, there are three ways to short.

The first is to hold the stock yourself and sell it directly on the stock market.

The second is securities lending.

As the literal meaning suggests, the nature of securities lending is similar to financing, but the biggest difference is that financing is borrowing money, while securities lending is borrowing stocks.

For example, Su Xin does not have the stocks of the three major automobile companies, but the major brokerages in Kyoto have plenty; what Su Xin needs to do is sign a contract with one of the brokerages, borrow the stocks of the three major automobile companies at the current share price, and then sell them in the stock market.

When the share price falls to a certain level, he then buys back an equal amount of stock at that low price and returns it to the brokerage.

That is, the method of selling first and buying later.

To give an example, if the current share price is 100 per share, Su Xin borrows one million shares and sells them at this price, he can obtain 100 million.

When the share price falls to 60, Su Xin buys one million shares on the stock market at the price of 60 to return to the brokerage, and at this time, he only needs to spend 60 million to buy the stocks.

Then his profit is 40 million.

Of course, securities lending transactions require high interest and commissions, similar to loan interest, but much higher than the latter.

And the leverage limit for securities lending transactions varies according to each country's policies; the maximum leverage domestically is two times, while in Sakura Country it is ten times.

Therefore, with 3.1 billion in funds as collateral, Su Xin can borrow at most 31 billion worth of stocks from the brokerage; as long as he tries his best to ensure that selling these stocks does not cause too much share price fluctuation, in an ideal situation, he can sell these stocks for 31 billion.

If the market value of the three major automobile companies shrinks by half, Su Xin only needs to spend 15.5 billion to purchase stocks to return to the brokerage, and the profit could reach 15.5 billion!

Even after deducting interest and commissions, he could at least earn around 15 billion!

This is the charm of finance.

Of course, once a short sale fails, especially a short sale under high leverage, the outcome is often bankruptcy and never being able to recover.

Many people become rich overnight in the stock market, but even more people lose everything in the stock market.

This is also why many wealthy people choose to jump off buildings after failing at stock speculation; it is because under the effect of leverage, they owe huge debts that are difficult to pay off in a lifetime, so they have no choice but to choose death.

As for the third way of shorting, it is stock index futures shorting, but stock index futures look at the broad market index, not individual stocks, so it is not applicable to Su Xin's situation.

Therefore, the most suitable way for Su Xin to short at present is through securities lending.

Not long after, Luan Weiliang took Su Xin to sign the securities lending contract with the brokerage.

Before this, Su Xin had already transferred the 3.1 billion in funds from the company account into an overseas account.

After the contract was signed, he transferred all 3.1 billion into the credit account opened at the exchange, signed a ten-times leverage contract with the brokerage, and borrowed about 10 billion worth of stocks from each of the three major automobile companies in Sakura Country, agreeing to return them within six months at the latest.

Of course.

This move by Su Xin could not be called a desperate gamble; after all, the expiration times for the monthly memberships of Tiantian Assistant are inconsistent, and almost every day a large number of users renew their subscriptions, providing a continuous stream of massive funds for Tianqi Technology, with the average daily renewal revenue being nearly 60 million.

Even if he withdrew the vast majority of the funds, it would not cause the company to fall into a predicament.

And here in the stock market, Su Xin has the trump card of the Solid-state Battery, and he is very confident that as long as he releases the Solid-state Battery and officially announces it is entering mass production, he will definitely be able to drive down the share prices of the three major traditional automobile companies in Sakura Country.

To others, this behavior could be said to be extremely risky, but to Su Xin, this is almost a sure-win deal.

In the VIP room of the Kyoto Stock Exchange.

Su Xin watched as Luan Weiliang and the others continuously operated to sell the stocks of the three major automobile companies, and bit by bit increased the selling volume, and these stocks were quickly bought up by retail investors.

Their operations did not cause any fluctuation in the share prices of the three major automobile companies at all.

After all, the market value of the three major automobile companies in Sakura Country reached hundreds of billions or even trillions of Eagle Dollars, which, when converted into Long Coin, is trillions of Long Coin.

And that is trillions of Long Coin for each company.

With the 30 billion in funds Su Xin has on hand, spread out, it is only about 10 billion worth of stock per company; unless sold all at once, it is difficult to trigger large fluctuations in the share price.

Moreover, the automobile industry is the largest pillar industry in Sakura Country, accounting for about 40% of Sakura Country's industrial output value and providing over 5 million jobs; the three major automobile companies are the three overlords of the Sakura Country automobile industry, and unless they encounter force majeure factors, the Sakura Country authorities would not easily allow the share prices of the three major automobile companies to plummet.

This is also why Su Xin was convinced from the beginning that as long as he possessed an indispensable position in the automobile industry, he could leverage the world's landscape and possess immense influence on a global scale.

In the next few days.

Su Xin and Luan Weiliang and the others spent most of their time in the VIP room of the Kyoto Stock Exchange, continuously operating to sell the stocks of the three major automobile companies; sometimes they released tens of thousands of shares at once, sometimes only a few hundred shares, and sometimes they even bought some back, using high frequency to deceive the public and try their best to avoid causing panic among retail investors.

Only in this way could they avoid a drop in share price.

Their operations were indeed effective; the hundreds of thousands of shares listed at normal prices were basically quickly snapped up by retail or large investors in Sakura Country.

In the eyes of the people of Sakura Country, the stocks of the three major automobile companies are all high-quality stocks, which are not necessarily easy to buy at ordinary times; now that someone is finally selling them in large quantities, they naturally scrambled to buy them.

However, these large-scale transactions still attracted the attention of the financial departments of the three major automobile companies.

After all, the stocks of the three major automobile companies have always been favored by everyone, and it is rare for continuous large-scale selling to appear in the stock market.

And in these few days, the selling volume in the stock market was several times higher than usual, and from time to time there were large-volume sales.

Financial Department of Yutian Automobile Group.

The trader responsible for monitoring the stock market reported the abnormal buying and selling situation in the stock market to their superior, and the latter reported it to higher management immediately.

After the higher management understood the situation, they just said casually: "It is normal for some retail or large investors to buy and sell; as long as there is no large-scale dumping and it has not caused share price fluctuations, then there is no problem, no need to worry about it."

Generally speaking, as long as the company's operating condition is good and funds are abundant, with the scale of Yutian Automobile Group, there is indeed no need to pay too much attention to these small fluctuations in the stock market.

With the instructions from their superior, the management of the financial department did not take it to heart and ordered the trader to continue monitoring.