Chapter 260: New Guest
The next day at noon.
After Ma Shiqi ate and came back, he asked Gu Yansheng.
“Minister, I heard some rumors that the Japanese are going to confiscate grain. Is that true?”
“The city government is really like a leaky bellows, with no guard on its mouth.”
Gu Yansheng leaned back, picked up the coffee cup and took a sip. That morning he read the newspaper, and there was no news of forced requisition at all.
“What did you hear?”
“You know there are people in the Jiangbei Gang doing grain business. There’s a brother who suddenly got contacted by other businessmen last night, wanting to acquire a batch of rice, saying it’s for allocation.
He didn’t think much of it at the time, thinking that new rice was about to go public, so processing the old rice to free up the warehouse was good, and he could earn a favor, so he sold it.
This morning he mentioned it to other businessmen and found out that not only he was swept up.
He felt something fishy and found people to inquire. Some rice businesses have already started to increase prices. He asked those rice business people why the prices increased, but they wouldn’t say the reason, so he found it particularly strange.
Isn’t it because he knows I’m here with you, so he came to eat with me at noon and asked me to help inquire about some information.
Is there a change in the city government?”
The Jiangbei Gang could be considered his own people, so Gu Yansheng didn’t mind revealing a bit.
“The Japanese are going to collect grain, and the amount is not small. Tell your friend to acquire as much grain as he can. Shanghai won’t be far from grain shortage, maybe just a few days.”
“This serious? Grain shortage in autumn harvest season?” Ma Shiqi’s expression changed slightly.
Gu Yansheng put down the cup and added, “The collected grain needs to be stored well. What happens next is hard to say. If they search house to house and find it, there’s no salvation.”
“Minister, how much grain are the Japanese going to collect exactly?”
“One hundred thousand tons.”
“One hundred thousand tons?” Ma Shiqi drew in a sharp breath. He thought about it and knew he didn’t need to ask more. “Thanks, Minister. I’ll make a telephone call to notify him. No problem, right?”
“Jiangbei Gang knowing is no problem, just don’t spread it outside your control range.”
“That’s for sure. I’ll remind them.”
“Mm, go ahead.”
Gu Yansheng watched Ma Shiqi leave. Hoarding and price gouging was here, and all with official backgrounds. Probably various leaders in the city government were involved, and Fu Xiao’an was the big player.
The Japanese wanted to collect nine thousand tons per month and let Shanghai transition smoothly without chaos. Wishful thinking.
Two days later, the news that should spread had spread. There were rumors on the market, small-scale panic began, and Shanghai people, having learned from past mistakes, immediately went out on the streets to hoard grain.
“Minister.” A subordinate hurried upstairs to report, “Vice Minister Gao Zhongwu wants to visit you. He’s at the door.”
“Gao Zhongwu? What is he here for?”
Gu Yansheng thought as he walked downstairs to welcome him without stopping. “Haha, Minister Gao, how come you’re here at my place?”
“Minister Gu.” Gao Zhongwu came forward laughing heartily. “I came nearby to handle some matters. That person has no manners, didn’t even give me water to drink. I talked for half a day and my mouth is dry, so I thought to come to you for a drink of water. Not disturbing, right?”
Your home is only one kilometer from here. Next time, come up with a better excuse.
“Not disturbing at all. Please come upstairs.” Gu Yansheng led him upstairs.
After sitting down, Gu Yansheng asked, “What are you here to handle? Negotiation matters?”
“Yeah.”
Gao Zhongwu sat down, drank tea, and chatted about all sorts of things. Gu Yansheng casually asked a couple questions about his negotiation progress with the Japanese. After talking for a while, Gao Zhongwu finally got to the point.
“Minister Gu, have you been following the stock market lately? Last time on the airplane I heard you talking about stocks, so after I got back I really paid attention. Now the cotton yarn market trend is explosive. Public sentiment is unusually high, stock prices keep rising. It’s like you can pick up money just by entering.
But I don’t get it. If everyone’s making money, who’s losing? Is there really such a good thing?”
You were sent back from Hong Kong for negotiations, and now you’re trading stocks.
Gu Yansheng laughed heartily. “Minister Gao is testing me. You’ve studied economics. Why ask me about this?”
Gao Zhongwu shook his head with a sighing laugh. “I’m no good anymore. Busy with foreign affairs, my economic skills have rusted for too many years. How can I compare to Mr. Gu, who focuses on government affairs and is highly sensitive to the economy? So I came to consult Mr. Gu.”
Gu Yansheng smiled faintly. “What consult? I only know a little. We can discuss. The stock market is bought up with money. External funds entering Shanghai naturally raises the water level. It doesn’t have to mean someone is losing money. It really can be that everyone makes money.
Of course, this is assuming the water level doesn’t go down.”
“So Mr. Gu, you think the cotton yarn market trend is bullish?” Gao Zhongwu had been focusing on cotton yarn lately.
“Bullish.” Gu Yansheng smiled and gave an affirmative answer.
“But these two days there are market rumors that the Japanese are going to forcibly confiscate grain. Last year the city government forcibly confiscated once, leading to a stock market crash. These two days the exchange has a lot of funds selling. Afraid the stock market crash is coming. You think it won’t repeat?”
“Bought?”
“Heh, Minister Gu is prescient. You can tell?”
Nonsense. Spreading a crappy rumor and analyzing so nervously—who needs to guess? And probably bought quite a lot.
“It won’t fall for now. Hold on.”
“Why? Hope Mr. Gu will enlighten me.” Gao Zhongwu frowned, leaned forward, very serious.
“The reason is complicated. Forced requisition will cause a fall, but whether it falls or not isn’t just about whether the Japanese forcibly confiscate or not.”
Gu Yansheng also chatted casually with him.
The process doesn’t matter, what is said doesn’t matter. Anyway, the result is a rise. Gao Zhongwu will figure it out himself later.
“You see, it’s so nice to meet Minister Gu. We talked overtime and delayed your business. I’ll go back and study more.”
“Good, take care.”
Gu Yansheng went downstairs to see him off for a bit. Gao Zhongwu was still useful, to claim credit with Boss Dai.
Ring ring, ring ring.
Gu Yansheng went upstairs and picked up the telephone. “Who is it?”
Fu Xiao’an’s voice came. “Hey, Brother Gu. Just now Lu Ying, Li Shiqun and I had a meeting. The general plan is drafted.
Starting tomorrow to collect grain. Just letting you know. They’ll send people to handle public order.”
“Good, got it.”
The next day, the city government held a press conference, officially announcing the start of grain confiscation. Afraid of causing panic, they didn’t say one hundred thousand tons, just that grain prices would rise a bit, no big problem, Shanghai can handle it.
As soon as the news came out, stocks at the exchange fell across the board. Funds didn’t believe such nonsense. Last year’s painful experience of forced requisition left shadows on Shanghai people. Selling pressure was huge for a while.
And with the newspaper disclosing that the target of this confiscation is one hundred thousand tons, and firmly stating that over a hundred thousand people will starve to death.
Making fragile sentiment completely collapse.
Cotton yarn futures had already risen high, many thought it was overhyped. Now encountering this panic event, price almost smashed from 280 below 200.
But Fu Xiao’an was prepared and started putting in funds to take delivery of goods.
According to Fu Xiao’an, “The whole stock market falling isn’t bad. I want to take delivery at times like this. At 200 price point, take as much as there is. Not only won’t I let it fall, I’ll make it rise.
As long as we hold the first wave of decline, the rest is easy.
Others falling, mine rising—that’s the only steadily rising stock. Brother Gu, believe it or not, eventually all Shanghai stockholders will come to do cotton yarn.”
Makes sense. With enough money, you can do whatever you want.
What Fu Xiao’an said did come true. Cotton yarn bottomed at 200 price point, then steadily rose, immediately becoming the brightest star in all of Shanghai Stock Market.
Grain in the concession couldn’t be confiscated by the Japanese. Concession residents had no immediate pressure to eat. Those trading stocks continued trading.
Gu Yansheng’s strategy, plus newspaper propaganda, funds from other falling stocks joined the cotton yarn rising army. Cotton yarn futures were hot.
More funds joined, price broke back above 280 in a few short days, charging toward 300.
And as a round number psychological barrier, it naturally makes people timid, but the long-short battle at 300 only took one day to break through. Cotton yarn price continued upward spiritedly.
310, 320, 330.
The sky is the limit for cotton yarn futures.
During this time, who knows how much concession funds went short to long, long to short. They just didn’t believe cotton yarn was worth this price. Reason told them to short cotton yarn, but reality told them cotton yarn was still rising.
Want to smash the market and short to make money, but not enough chips.
They sell, retail investors take over. Retail investors happily keep taking. Retail investors’ courage gave them headaches. They didn’t have many chips to begin with. Sell a bit more and they’d wash themselves out.
Could only flip short to long and buy back, but reason comes out again to tell them this won’t work.
This isn’t them operating the market. That’s the biggest problem.
If they want a chance to operate the market, Fu Xiao’an can give it to them. Take over people have appeared. Time to ship out when needed, ship while pulling up, secure profits.
And during this time, bandwagon effect came. Stocks of factories related to cotton yarn started soaring.
Like Yong’an Cotton Mill, Huafeng Cotton Mill, such production cotton yarn and listed enterprises, totally had stories to tell.
Cotton yarn price rose, cotton mills definitely making money. Stock price rise totally reasonable.
On spot goods, even 300 silver dollars sold well. Businessmen can’t wait forever, must place orders and ship back. Any later and it won’t make it.
Now, all signs indicate funds have high acceptance of cotton yarn price increase. Cotton yarn price entered main uptrend, directly soared to 400. Concession went crazy, all Shanghai stockholders went crazy. Many got rich overnight, even consumption improved.
Mitsui Company.
Heads of several Japanese enterprises in Shanghai sat together for a meeting.
This cotton yarn market trend, except Sato Kenji who likes trading stocks ate a wave, others basically had no revenue.
“Chinese are too cunning. Surprisingly no rumor of price increase leaked when acquiring cotton. This couldn’t be a one-day decision. They laid out early.”
“This was done by Fu Xiao’an. I inquired. He led all businessmen to increase cotton yarn prices.”
“Fu Xiao’an is too wicked.”
“No point dwelling on that. The problem now is how we profit from this.”
Actually everyone made a bit. Each has cotton mills. Fu Xiao’an side increased prices, they also increased and sold.
But their premium cotton yarn basically only supplied Hongkou Japanese residents and army demand, and military supplies were the bulk, so revenue really not much.
And got cursed by expatriates.
“Sato, you called us here today. Do you have some idea?”
“Yes.” Sato Kenji smiled faintly. “Cotton yarn market so hot, I’ve been thinking lately how to let everyone get a piece. I figured it out yesterday. Actually making money is very simple.
They pushed cotton yarn price to 400. We take advantage of the high price and throw out all military supplies cotton yarn, sell to those businessmen, not a piece left.”
“Then how do we deliver?” Others listened stunned.
When time comes, what do soldiers wear?
Sato Kenji was very calm. “Why do you think Fu Xiao’an didn’t announce cotton yarn price increase before cotton arrived in his hands?
Because of fear.
Because pricing power for cotton not in his hands.
Essentially because he has no power.
Simple then. Sell all cotton yarn at 400, then issue order to price control cotton yarn, like current grain, only allow selling at 70.
We sell at 400, buy back at 70. Earn 330 silver dollars per piece of cotton yarn. Ten thousand pieces is 3.3 million silver dollars!”
Several people looked at each other, all stunned by the idea. “Good idea. No objection.”
“Me neither.”
“Then it’s settled. But be careful, don’t dump too much at once. Sell to multiple businessmen in batches, so cotton yarn doesn’t drop too fast.
And can’t say it’s military use. Say it’s our excess production.
Also, newspapers under your names need to propagandize that cotton yarn price will keep rising. Must ensure before we finish shipping, the situation looks great.”
“Understood.”
Sato smiled. “This point is very important. I remind you again, absolutely cannot let the market collapse.
Lately, the stock market is actually interesting. Fu Xiao’an’s funds, concession Britain and America funds, all trading cotton yarn.
As far as I know, many Britain and America funds that initially shorted cotton yarn joined the long side midway.
But I have always been short selling. I already have quite a few short positions, and there will be more.
You can join too. Buy short positions very gently, don’t attract attention.
Now buy small amounts. Wait till we finish shipping cotton yarn, then heavily short sell. Leave time for us to open positions. That’s the meaning of not collapsing. Hope you all remember.
Cotton yarn spot, we earn 330. Cotton yarn futures, with leverage, on one pack of cotton yarn, we can maneuver over a thousand profit!
Gentlemen, this time, we harvest global capital!”
Heads of major Japanese enterprises shocked by Sato’s idea, then excited. Long time since a group united to slaughter outsiders.
“Sato, just as you say. Our army is invincible. Our capital will stand at the world pinnacle too. Cheers.”
“Japanese enterprises are selling cotton yarn.”
Tea House. Fu Xiao’an came to find Gu Yansheng and mentioned this.
“Selling is selling. What’s wrong? Affecting our inventory?” Gu Yansheng didn’t think it strange at first. Japanese enterprises produce cotton yarn anyway, selling at high price normal.
But Fu Xiao’an knew the Shanghai market too well.
“Japanese selling cotton yarn nothing wrong, but quantity too big. I know how much cotton yarn Japanese have.
How much they can produce per month, whether it affects our sales, I calculated before.
Now, businessmen tell me Japanese privately found them, increased cotton yarn supply. Not only good quality, price same as us, letting businessmen buy cotton yarn from them.”
“Quantity big?”
“Very big. I asked their factory workers, Chinese. Cotton yarn supposed to be in warehouse for army delivery on time, but now Japanese management let businessmen see warehouse goods. I suspect they sold military supplies cotton yarn.”
Then Gu Yansheng felt it was off too.
Selling military supplies, not about money anymore.
“Army cotton yarn orders must have been placed long ago. Now sold out, what do they use to deliver?” Gu Yansheng thought. “Unless sell first buy later? Smash price to earn price difference?”
This was an easy possibility to deduce.
But actually a bit problematic. Japanese army’s own military cotton yarn quality a bit better, marketized cotton yarn quality a bit worse.
Even if Japanese enterprises later scheme to buy back, they can only get marketized batch. Hard to recover original. Such big quantity dumped, too dispersed.
Gu Yansheng looked at Fu Xiao’an. “What do you think?”
“Clear positions and run.” Fu Xiao’an sneered. “I don’t want to mix with Japanese. If they really forcibly confiscate, afraid I can’t even run. Clear positions and run. If they forcibly confiscate, we follow Japanese short selling, can still make money.
Just came to ask your opinion. Exiting in a hurry definitely earns less, but safe.”
Cotton yarn production takes time. What they have on hand sold out, but still have cotton yarn not produced. If Japanese smash price, that portion’s revenue they’ll lose some, but overall definitely profit, just less.
“Safety first. No objection.” Gu Yansheng was very cautious. “But with so many positions, can they sell out in a hurry?”
“Buyers there.” Fu Xiao’an smiled and brushed dust off his pants. “These days, concession people called me a lot, want me to do it with them.”
“Aren’t they already doing it?” Gu Yansheng was puzzled. At this price, concession funds definitely entered quite a bit.
“Think market price too expensive. Want me to discount a batch for them. The reason is they buy at original market price, feel unsafe, afraid I turn around and smash to trick them.
Discount dozens to sell to them. Even if I smash, don’t they have safe space to run?
Counts as me paying to show sincerity, partner with them to make market. These guys are sharp.
Benefits too. Price can keep lifting.”
“Oh.” Then Gu Yansheng understood.
Fu Xiao’an said, “Originally I didn’t agree. When they pitted me before, why not let me off? Right?
But now new situation out, I really need to toss this hot cake to them, let Japanese play with them.”
“Hahahaha.” Gu Yansheng laughed happily. “They want it so bad, give it to them. We store arms, beat the gold gong to withdraw troops.”
“Alright, then I’ll go back and arrange. Each sells a bit, so they all feel involved.”
