Chapter 64: The Monster Stock Has Appeared

[joker]: The call-auction market for the Big Four banks and Huaxin Securities continues to weaken. The intervals between the white auction dots are widening, and the matching volume above is shrinking. The Cross-Strait Financial Cooperation Agreement seems unable to reverse the downward trend. Proceed with caution.

"Whoosh—"

Zhang Yang's message was sent out.

Shortly after.

Group messages flew about wildly.

[Lonely Wolf]: You mean today is garbage time again?

[Invincible Xiaojie]: No way, even such a massive positive catalyst couldn't push the banks up? What on earth are the main forces trying to do?

[Beloved Xiaoqian]: @joker, asking for a friend who doesn't know—after Changan Automobile's sharp correction following three consecutive limit-ups, is it still safe to enter?

[Rabbit Doesn't Eat Grass]: Why must we wait for banks and securities to initiate a rally? Are A-shares truly finished if they don't rise?

Zhang Yang did not answer the question regarding individual stocks. He provided mid-session warnings, not lessons on how to play the stock market, nor did he offer individual stock diagnoses.

After glancing around, he replied to "Rabbit Doesn't Eat Grass":

"They act as macroeconomic indicators in the A-shares. When the macroeconomy is poor, it is extremely difficult for the microeconomy to break through. Group members who have entrepreneurial experience in the past two years should deeply understand this."

As soon as the message was sent, a group member immediately chimed in.

[Midnight Wine]: I truly understand this deeply. Just graduated in 2002, knowing nothing, I opened a restaurant with a friend. The first few years were alright, income was quite stable, but in the past two years with the subprime mortgage crisis arriving, I lost over 300,000 yuan in just two years.

[Little Chen Chen]: I have it even worse. The hundred thousand or so I saved from working were poured into a milk tea shop in early 2007. Less than two months after finishing renovations and opening for business, the million-peasant-worker return wave hit. Everyone had no money left to spend.

[Qingyuan Confucianism]: This means starting a business when the macro environment is good does not guarantee 100% success, but starting a business when the macro environment is poor makes the hope of success infinitely more remote.

Anyone who has studied Macroeconomics knows that when the macro environment is poor, it is unsuitable for starting a business. The economic downturn cycle is a test of cash flow reserves and asset preservation.

Applying economics to A-shares makes it clear why it is unsuitable to enter the market when the broad market fluctuates and weakens.

The most obvious example is the 6,000-point peak in 2007. It acts as the inflection point of the economy's epitome. If you refuse to accept reality, the only place you will see next is 1,800 points.

...

After issuing the mid-session warning, Zhang Yang stopped looking at the content of the VIP research report group and focused instead on the upcoming opening of the A-shares.

At 9:30 AM, the A-shares opened.

The banking sector pulled back once more, with the Big Four banks serving as the main culprits driving the market down. China Construction Bank dipped to 4.29 yuan, a drop of 1.38%, while the Industrial and Commercial Bank of China fell by 1.79%, bringing its stock price to 3.96 yuan. Sectors like securities and insurance were dragged down into the water alongside the banking sector.

The continued low opening and steep decline of the broad market drew a torrent of complaints from countless retail investors in the stock forums, and quite a few technical analysts maintained a deeply pessimistic attitude.

[Brother Feng's Stock Trading Teaching]: It's finished. A-shares are truly finished. April 22nd saw a sharp drop of 2.94%, and although the 23rd showed a tiny bit of red, now we have two consecutive bearish candlesticks. This is a top-reversal trend!

[Jianghu Retail Investor]: The broad market has broken below 2,400 points. The current support level is April 9th's 2,379 points. If it breaks the twenty-day moving average, then excuse me, I'm looking straight at March 3rd's 2,000 points. No jokes intended.

[King's Assault]: Stop falling, I'm begging you to stop falling, A-shares! I went all-in just last week. If it drops any further, my wife is going to divorce me.

[Cola-Flavored Chicken Wings]: I'm kneeling before you, Daddy A-shares. Rise, please rise. I'm from Ganxi, and my girlfriend's bride price requires 180,000 yuan. I'm counting on you to surge 20% so I can get married.

Market sentiment had clearly turned pessimistic. Four consecutive days of declines resulted in an increasing number of profitable positions cashing out.

Why call it four days of declines?

Because beneath a marginally red Shanghai Composite Index lay a battlefield strewn with the corpses of plunging stocks.

Many retail investors had experienced this: even when their own stocks, and indeed the entire market, fell into an absolute mess, the index remained marginally red, which in reality was no different from a sharp decline.

"Huh?"

Just as the broad market performed poorly, Zhang Yang suddenly noticed that one sector was bucking the trend with a massive surge. Huaxin Securities' sector concept anomaly alert showed that it was the only sector turning red.

"Shikimic acid."

Zhang Yang muttered to himself, seemingly recalling something.

He clicked his mouse lightly and discovered that shikimic acid concept stocks were collectively rising with heavy volume.

Riyuan Bio was the first to hit the limit-up, which also reminded Zhang Yang that Riyuan Bio was an immensely controversial market-concept monster stock of 2009.

Why was it controversial?

If Zhang Yang remembered correctly, it was not a true shikimic acid leading enterprise, but merely a product of hot money speculation.

The reason it possessed the shikimic acid concept was that following the outbreak of the H1N1 influenza epidemic in March, Riyuan Bio immediately organized raw material procurement, initiated shikimic acid production, and secured 10 sales contracts with a total value of 31.747 million yuan.

Precisely due to market speculation, Riyuan Bio's stock price surged all the way from the limit-up opening price of 13.73 yuan on the 27th to a peak of 50.5 yuan.

As a monster stock of the first half of 2009, Professor Wang Xingbang had deliberately brought it up in class during his past life, analyzing its fundamentals and summing it up in nine characters: a concept-speculation stock without support.

Ever since his rebirth, Zhang Yang had kept an eye on the medical sector, but the memories were from so long ago that even he did not know exactly when medical drugs would erupt.

At this moment, the explosion of the "shikimic acid concept" lifted the seal on his memories, allowing him to find his memory anchor.

"It seems that on April 25th, the WHO World Health Organization classified the H1N1 influenza outbreak originating in Mexico and the United States as a 'Public Health Emergency of International Concern', which is the starting point of the rally for the entire A-share influenza drug concept."

"If Riyuan Bio is not the true leader, then who is?"

A breathtaking thought flashed through Zhang Yang's mind. He immediately sent a message to He Jing, asking her to help search and find out which company was truly the leading enterprise in shikimic acid.

Right now, hot money had already locked the limit-up with 1.9 million lots, and without a hot money brokerage seat, it was practically impossible for Zhang Yang to buy into Riyuan Bio.

Give up on the monster stock?

Apologies, Zhang Yang could not do that!

Since he could not buy Riyuan Bio, he could simply "create" a Riyuan Bio of his own.

Having just woken up, He Jing saw Zhang Yang's message and didn't even bother to wash up before scanning the internet for clues pointing to the true leader.

Two hours later, He Jing compiled a list of shikimic acid-related companies, sent it to Zhang Yang via a QQ file, and asked: "Are you planning to chase the rally on pharmaceutical stocks?"

"Pretty much."

Zhang Yang typed his response.

Then he compared the enterprises He Jing collected with those he had gathered himself, shortlisted five leading companies for further cross-referencing, and ultimately unearthed the true shikimic acid enterprise stock—Jianfeng Group.

Jianfeng Group's predecessor was the Jinhua Cement Plant founded in 1958. It underwent a joint-stock system reform in 1988 and was listed on the Shanghai Stock Exchange in 1993, making it the first listed company in China's cement industry.

Those without deep understanding might wonder how an enterprise in the cement industry could be linked to shikimic acid, the raw material for influenza wonder drugs.

In reality, the entity truly connected to shikimic acid was not Jianfeng Group itself, but its subsidiary, Tianjin Jianfeng Natural Products Company.

Its technology for "Extracting Shikimic Acid from Star Anise" passed the expert appraisal organized by the Tianjin Municipal Science and Technology Commission in 2006, concluding that it was "domestic leading technology" and highlighting its distinct advantages of a short production cycle and minimal environmental pollution.

Upon finding the "true dragon," Zhang Yang began pondering how to leverage external force.

Since he only had 1 million yuan to his name, it was utterly impossible for him to seal the limit-up himself; he had to enlist the help of major capital.

Currently, the only hot money player he knew was "Jumping Brother," whom he mutually followed.

Of course, he could also take an unorthodox path and rally the hundreds of retail investors in the VIP research report group and communication groups to join forces, but that target would be far too large. Once reported to the China Securities Regulatory Commission, he could easily be slapped with the charge of "market manipulation."