Siheyuan: I am different He Yuzhu

"A long-term boom in the stock market often means that a stock market crash is coming. In 1929, America experienced an unprecedented stock market crash, which then caused an economic crisis in the entire country, and even plunged the entire world into the Great Depression. If it weren't for America's large land area and strong foundation, it would have persisted for a few more years. Script Chicken did not have such a strong foundation and could not withstand the economic crisis. It directly launched a war of aggression against us, bringing a large number of orders to America. Otherwise, America would have had to launch a war to divert domestic conflicts."

"If that's what you said, won't Hong Kong's stock market crash sooner or later?"

"No one can say for sure, but a company's stock should have a reasonable price. If most companies' stocks are at a reasonable price, there will be no stock market crash. If the market is too hot and the stock prices of most companies are inflated, once someone sells a large number of their stocks, once this person's behavior causes a chain reaction in the entire market, there may be a stock market crash. Once a large-scale stock market crash occurs, it will eventually implicate the banks. So, Dad, if you want to control Hang Seng Bank in the future, you can prepare more funds in the next few years. Once a large-scale stock market crash occurs in Hong Kong, you will have the opportunity to take control of Hang Seng Bank."

"Xiao He, aren't you exaggerating a bit? How could a stock market crash affect banks? Banks don't trade in stocks." Lou Bingcheng asked with a puzzled look after hearing He Yuzhu's words.

"Dad, even though banks don't speculate in stocks, if the stock market is hot, then some people will borrow money from banks to speculate in stocks. If the stock market keeps rising, then banks won't have to worry about not getting back the money they lent out. Once a major stock market crash occurs, people who borrowed money from banks and put it in the stock market may become penniless overnight. They won't have the money to pay back the bank. If there are only one or two people like this, then it's fine. But if many people who owe the bank money can't pay it back, then the bank will be affected."

"But banks won't lend money to people for no reason. Instead, they ask the other party to provide collateral. He can't pay back the money, but his collateral is in the bank's hands. The bank has his collateral, so as long as they sell it, everything will be fine."

"Dad, the mortgage you are talking about is the house, right?" He Yuzhu asked with a smile.

"Well, private loans in Hong Kong are usually mortgaged with houses." Lou Bingcheng nodded and replied.

"Let's take a house for example. Suppose a person uses his house as collateral to borrow 10 yuan from a bank. He then invests all the money in the stock market. As a result, the stocks he bought plummet, and he loses half of his 10 yuan. He then has no money to pay back the bank, so the bank takes his house away according to the agreement when he borrowed the money. Is that okay?"

"No problem, that's how banks deal with bad loans."

"Although the bank lost money on paper, it did not lose any money in the house it received. But don't forget one thing, Dad. The money in the bank is deposited by the depositors. If a small bank cannot collect the money it lent out because it has lent out too much, and is unable to give money to the depositors, as long as one bank has this situation, then the depositors of other small banks will also go to the bank where they deposited their money to withdraw their money out of fear that there will be problems with their money. This will lead to the situation that banks fear the most - a run. At this time, the bank will not have so much money to give to depositors. After all, most of the bank's money has been lent out. In this way, the bank has no money for depositors to withdraw, and more depositors will come to withdraw money, which will eventually lead to the bank's bankruptcy because it has no money to give to depositors."

"Then can't the bank sell the house and give the depositor money? You have to know that when a house is mortgaged to a bank, the bank usually lends out 50% to 60% of the house's value."

"Dad, you're right, but the key is that houses are valuable, and it takes time to turn them into money. The reason for the bank run is that there is no time to raise enough money to deal with depositors. Besides, if there is a stock market crash, many people will definitely sell their houses, and the price of houses will definitely fall. So as long as you have enough money at this time, you can take the opportunity to buy the stocks held by other shareholders of Hang Seng Bank, so as to achieve absolute control of Hang Seng Bank."

"Then, Xiao He, what do you think we should do to get other shareholders of Hang Seng Bank to transfer their shares to me?" After hearing what He Yuzhu said, Lou Bingcheng asked with great interest.

"It's very simple. The first point is that in the future, don't put all your company's money in Hang Seng Bank. Put it in other banks, and finally Western banks. Then when Hang Seng Bank can't cope with depositors withdrawing money and a run occurs, you can talk to other shareholders at this time. Either sell your shares to you and you increase your capital injection into the bank, or just wait for the bank to go bankrupt and everyone will pay together. Anyway, we can afford it. If Hang Seng Bank really goes bankrupt, then the assets of other shareholders may be gone. They certainly don't want the bank to go bankrupt. At that time, they will agree to sell their shares to you. In this way, you can take the opportunity to exchange your shares for money. In case Hang Seng Bank can't bear it and really goes bankrupt, then they still have money in their hands. The risk will be yours at that time, and it has nothing to do with them."

"The bank managed to hold on to that thing and didn't go bankrupt, so they suffered a loss."

"Dad, you have to know that if they can't find someone very powerful to take over the bank, they will have nothing. If you buy their shares, even if the bank goes bankrupt, they can live a rich life with the money in their hands. There is no such thing as taking advantage without suffering any loss. If there is a trap set by a liar."

"Oh, by the way, Dad, in order to reduce the resistance of the current shareholders, you can promise other shareholders that the original management will not change and will be retained to continue to manage Hang Seng Bank. This will minimize the opposition of the management of Hang Seng Bank. Of course, we can't do nothing. We still need to add some of our own people to the board of directors."

"Your suggestion is good. The current management of Hang Seng Bank is excellent. They should indeed be allowed to continue to manage it. Moreover, Hang Seng Bank has been in their hands since its establishment. No one knows the company's situation better than them." Lou Bingcheng nodded and said.

"Dad, there is one more thing you need to pay attention to. If Hang Seng Bank is currently the largest Chinese bank in Hong Kong, then if you want to acquire the shares held by other shareholders of Hang Seng Bank, you must be careful of Western banks competing with you. In their eyes, such a good bank is definitely a piece of fat meat. There is no reason for them to let it go."

"If they are interested in it, I can't compete with them! HSBC is an old bank with a history of more than 100 years." After hearing what He Yuzhu said, Lou Bingcheng said with a worried look on his face.

"Dad, don't worry too much. Westerners are very greedy. They won't pay too high a price to buy Hang Seng Bank's shares. They will definitely take the opportunity to lower the price. However, buying the shares held by other shareholders of Hang Seng Bank is not the key. The key is how to help Hang Seng Bank deal with the bank run after the share acquisition is completed. If we can't help Hang Seng Bank solve the bank run, then we are just throwing money into the water."

"Xiao He, if Hang Seng Bank really encounters the situation you described, how much money do you think it would take to help Hang Seng Bank cope with the bank run?"

"At least 1 to 2 million Hong Kong dollars is needed. How can we predict the future? But for banks, the more money the better. The more money a bank has, the faster it can grow."

After hearing what He Yuzhu said, Lou Bingcheng's worry disappeared instantly, and he said with a relaxed look, "I thought it was a lot, only 1 to 2 million Hong Kong dollars! Although I can't come up with 2 million Hong Kong dollars now, I can still get more than 1 million. If the money is not enough by then, I will go back to Beijing and shamelessly mortgage my assets in China to the government. I should be able to borrow at least 1 million."

"Dad, I'm talking about estimates. I don't know how much it really takes. What we're talking about here is just speculation. It's not certain whether it will happen in the future. You should still focus on the development of your own industry instead of these things that haven't happened yet. As long as your industry is big enough, it will be easy to acquire Hang Seng Bank."

"Xiao He, I understand what you said, but I believe in your vision. I will start preparing when I return to Hong Kong, so that when what you said really happens, I can take the time to acquire Hang Seng Bank."

"Don't worry about the rest. When you return, you must transfer some of your funds from Hang Seng Bank. It would be best if you put it in the Bank of Communications in Hong Kong. At least it is safer than John Bull Bank."

"Well, that's what we should do. We keep our money in their bank and try to steal their business. Isn't that courting death?" Lou Bingcheng said with a laugh.