Chapter 67 Short-Term Market Themes

"What on earth is shikimic acid?"

Lujiazui, Shanghai.

The Panorama Garden residential community.

Tao Yu'ang was carefully studying the market research report sent by Zhang Yang, the end of which heavily emphasized the "shikimic acid concept." Furthermore, Zhang Yang had specifically sent him a QQ message emphasizing that shikimic acid might become the short-term main market theme.

After some searching, Tao Yu'ang also understood the importance of shikimic acid.

"It's an intermediate for antiviral and anti-cancer drugs, showing strong inhibitory effects against various DNA and RNA viral diseases, and it's also a vital raw material for synthesizing the anti-influenza drug oseltamivir."

"In other words, Zhang Yang believes the market is going to speculate around the H1N1 influenza."

As Tao Yu'ang muttered to himself, he recalled today's market trend.

Because both the banking and securities sectors had slumped, the Shanghai and Shenzhen indices once again experienced a sharp pullback, and the situation looked far from optimistic. The only sector concept turning red was shikimic acid.

After confirming that shikimic acid met the conditions for speculation, he continued digging.

When he saw the list of buying brokerage branches for Lianyungang Bioscience (Note: translated naturally as industry standard), which was the first to hit the daily limit, Tao Yu'ang immediately exclaimed in surprise, "Turns out it was driven by Xu Xiang."

Every hot-money investor has their go-to securities branches, and Xu Xiang frequently used four branches, namely...

1. Galaxy Securities Ningbo Liberation South Road Branch.
2. Guotai Junan Securities Shanghai Suxiang Road Branch.
3. Orient Securities Shanghai Baoqing Road Branch.
4. Orient Securities Shanghai Zhaojiabang Road Branch.

It is worth noting that a brokerage branch does not exclusively belong to any single hot-money investor; as long as you pay for a seat, you can also use the corresponding branch's trading channel. When appearing on the top-list (Dragon and Tiger List), the name displayed would still be these branch names.

Some minor hot-money players, in order to better drive market sentiment, would deliberately use the branch seats commonly used by prominent hot-money investors, commonly known as "borrowing a vest."

After following the clues and figuring it out, Tao Yu'ang picked up his coffee cup and whispered his analysis: "The WHO has just characterized the H1N1 influenza, and Xu Xiang couldn't wait to lock down the related concept by hitting the daily limit. Judging by his trading style, shikimic acid indeed has the potential to become the short-term main theme."

Thinking of this, he took a sip of coffee, put the cup down, and continued analyzing: "If I can predict the rise of shikimic acid concept stocks to the market in advance, once the company executives find out, they might give me more resources."

The sole purpose of Tao Yu'ang going to great lengths to reach the "Co-creation Agreement" with Zhang Yang was to secure the company's cultivation resources.

For a fund manager, the ability to accurately judge future market trend changes is the best proof of professional competence.

Take the Oracle of Omaha, Warren Buffett, for instance. He has invested for half a lifetime without a single misstep, cashing out and exiting every time right before the stock market crashes. Market capital has even established a reference data point called the "Buffett Indicator" for this legendary figure, which is the ultimate symbol of top-tier strength.

Nowadays, not only did Zhang Yang's research report mention shikimic acid, but Xu Xiang was also bullish on it, compounded by the WHO's characterization of H1N1 influenza.

All these factors indicated that the A-share market, and even the global capital market in the future, might well speculate around shikimic acid.

Seeing the shikimic acid concept stocks listed in the latter pages of the market research report, Tao Yu'ang verified them one by one.

He had never completely trusted Zhang Yang—or rather, he didn't dare to gamble his future on Zhang Yang's character.

What if Zhang Yang had a hidden agenda and wanted to use him to drive up stock prices? The serious consequences triggered by that would likely far exceed what he could bear.

Fortunately, after Tao Yu'ang's own thorough investigation, there were no problems with any of the shikimic acid concept stocks recommended in Zhang Yang's report, and Tao Yu'ang gradually set his mind at ease.

He had already decided to stay up all night rewriting the draft and submit it tomorrow, because the earlier he predicted the rise of the shikimic acid concept, the more secure his elite persona within the company would be.

...

The next day, the weather was bright and sunny.

As May approached, temperatures in Shanghai gradually rose, with the high over the past two days reaching 30 degrees Celsius. The air conditioning in the Lujiazui CBD commercial district also started running 24 hours a day without interruption.

Just like yesterday, Zhang Yang came to the leisure café on the commercial pedestrian street, ordered a cup of latte, and began watching the market.

Ever since the shikimic acid concept, led by Lianyungang Bioscience, hit the daily limit yesterday, news articles had erupted overwhelmingly over the past 12 hours.

On the Weibo information platform, the top three trending searches were all about H1N1 influenza-related keywords, one of which specifically mentioned shikimic acid.

9:15 AM.

A-share call auction.

The auction board remained lifeless, with both banking and securities opening lower, clearly showing that bearish sentiment was spreading.

However, it is worth noting that following the fermentation of last night's news, shikimic acid concept stocks all opened higher in positive territory, and Lianyungang Bioscience, which hit the limit yesterday, locked up its board once again.

Zhang Yang opened Lianyungang Bioscience's call auction board. The buying volume bars on it were continuously expanding, showing a bullish trend, but the matching volume underneath was continuously shrinking.

This trend indicated that retail investors holding Lianyungang Bioscience shares had no intention of selling, all believing that consecutive daily limits were possible.

Meanwhile, on Baidu Tieba, the stock Lianyungang Bioscience had already appeared in hot posts, with countless retail investors fiercely debating.

[Cola Doesn't Drink Alcohol]: Lianyungang Bioscience is about to hit its second consecutive daily limit. As the saying goes, two limits define the dragon stock; could this be the flagship dragon of shikimic acid?

[White Shoes]: Word has it that Lianyungang Bioscience is being cornered by the grand chieftain Xu Xiang. Barring accidents, it's going to start with at least 10 consecutive limit boards!

[Crazy Little Di]: Half a month ago, I sensed hot money intervening to accumulate shares in Lianyungang Bioscience, so I casually bought 5,000 yuan worth. Now I regret it—I regret buying too little.

The investment market is never short of speculators. Even knowing that Lianyungang Bioscience was a product of market hot-money speculation, a massive wave of capital would still follow suit.

Speculation and investment differ by only a single word, but the trading models and profit-and-loss ratios of the two can be described as worlds apart.

9:25 AM.

The call auction ended.

Zhang Yang picked up the Nokia phone resting on the table and called Zhong Qifeng, the trading manager at Hongyue Investment.

"Beep, beep, beep—"

Shortly after.

The call was connected.

"Good morning, Mr. Zhang. What stocks are we preparing to buy?" Zhong Qifeng asked with a smile from the other end of the line.

"No rush. Let's wait for the official market opening first,"

Zhang Yang replied.

Zhong Qifeng: "Alright, Mr. Zhang. I'll keep the line open. If you have any trading needs, just tell me over the phone."

The two did not hang up. Currently, Zhong Qifeng had only one client, Zhang Yang, enabling a one-on-one dedicated service.

At 9:30, when the market opened, the banking and securities sectors took another massive dump.

China Construction Bank's first-quarter report released yesterday showed that its net profit for the first quarter of 2009 was 26.276 billion yuan, a year-on-year decrease of 18.22%. This obvious negative earnings report caused China Construction Bank's stock price to open down 0.46%, currently quoted at 4.33 yuan.

The small "landmine" in China Construction Bank's Q1 financial report triggered a pullback in the banking sector. Coupled with the fact that Industrial and Commercial Bank of China was scheduled to release its Q1 financial report on April 28th—which was tonight at 9:00 PM—it caused market funds to grow increasingly anxious.

However, according to the information from Zhang Yang's past-life memories, the A-share market would not enter a bear market until July or August. This piece of information was undoubtedly more persuasive than the support signals displayed by K-lines.

Furthermore, the banking sector had been falling for five or six consecutive days. Even without past-life memories, one could still take a punt on a rebound within the downtrend.

In addition, after the release of China Construction Bank's Q1 financial report, the bad news had landed, and the market was currently digesting it. Even if it continued to fall afterward, one could add positions to average down the cost.

Thinking of this, Zhang Yang looked at the stock price, which had fallen to 4.3 yuan, and said, "Manager Zhong, help me buy 200,000 yuan worth of China Construction Bank."

"Right away, I'll execute the order."