SEC Chapter 1024 Inside News
Chapter 1024 Inside News
Lin Haoran stayed with Guo Xiaohan and her daughter until 10 p.m. before going into his study and making a phone call to Su Zhixue.
Su Zhixue had just returned from vacation a few days ago, having returned to New York City.
At this time, it was 9 a.m. in New York.
The phone rang a few times before being answered.
"Zhixue, it's me, good morning!" Lin Haoran said with a smile.
"Boss, are you back in Hong Kong?" Su Zhixue's slightly surprised voice came from the other end of the phone.
"Well, I just got back to Hong Kong today, and there's something I need you to do," Lin Haoran said, sitting in a recliner.
"Boss, I was just about to report something to you. You haven't been watching the news these past few days, have you?" Su Zhixue said with a smile.
“Indeed, I’ve been in mainland China for a while, so I haven’t been watching international news much. I haven’t even had time to look at the newspapers since I got back to Hong Kong. Has something happened?” Lin Haoran asked.
"Actually, it's nothing major. It's just that your purchase of 45 buildings in Manhattan, New York, was exposed a few days ago, and it caused quite a stir throughout the United States. Some forces and media took this opportunity to guide public opinion to the direction of foreign capital invasion."
"But boss, you're truly a visionary! You actually foresaw this. After your message was made public, public opinion shifted instantly, and even the White House issued a statement."
With a hint of a smile in his voice, Su Zhixue continued, "When the White House press secretary was asked about this at a regular press conference, he clearly stated that the United States welcomes legal and compliant international investment, and that Mr. Lin Haoran's investment behavior complies with U.S. law and is a positive signal for the U.S. economic recovery."
This statement silenced most of the media outlets and politicians who had been clamoring for foreign capital intrusion.
Upon hearing this, Lin Haoran raised an eyebrow slightly.
The White House's response was much more decisive than he had anticipated.
He originally thought the White House would at least wait and see for a while, but he didn't expect them to come out and support him so quickly.
However, this makes sense when you think about it. The US economy is in a recovery phase and needs the injection of international capital. The White House is unlikely to send a negative signal to foreign investment at this time.
A capitalist country like the United States would love to attract all the world's major investments to its homeland, so why would it actively push investors away?
Moreover, he used his own funds to buy the property, without taking out any bank loans or using any financial leverage. It was purely a matter of "real money coming in and real money staying in." This type of investment poses no risk of a bubble in the local real estate market. On the contrary, it is a real asset injection that can help stabilize housing prices in New York and even across the United States.
If the White House were to condemn such investments, then it would truly be out of its mind.
Su Zhixue continued, "After the White House made its statement, the public opinion in New York basically calmed down. Although there are still some sporadic voices, they are no longer a significant force. The bills pushing by those lawmakers to restrict foreign investment in real estate have also been shelved and will not be mentioned again in the short term."
“That’s normal. New York is the world’s largest city. If foreign investment in real estate is restricted, their own real estate market will be the first to suffer. Those politicians are just making empty promises. When it comes to legislation, Wall Street and real estate developers will be the first to disagree.”
“Indeed, according to what I’ve learned from Citibank, the New York Real Estate Board has privately contacted those lawmakers to express their opposition. The bill was shelved largely due to pressure from local business forces,” Su Zhixue said.
Lin Haoran nodded, but did not continue on this topic.
"Getting back to the point, Zhixue, the reason I'm calling you this time is to ask you to do something. How many shares of Dazhong are currently held by Huanyu Investment Company?"
"Boss, please wait a moment, let me take a look." The rustling sound of pages turning came from the other end of the phone.
After a short while, Su Zhixue replied, "Currently, Huanyu Investment Company holds 4.8% of Volkswagen's shares."
"So, you haven't increased your holdings in Volkswagen during this period, is that right?"
"Yes, boss. Currently, the company's holdings in major European, American, and Japanese companies have gradually reached the threshold, so we have stopped making large-scale increases in holdings."
"As per your previous instructions, our main focus for increasing holdings has been on US technology and consumer stocks. Our holdings in Europe and Japan are merely for risk diversification and not our primary focus," Su Zhixue explained.
Lin Haoran nodded.
His previous strategy was indeed like this: focus on the US market, with Europe and Japan as supplementary markets.
However, the purpose of secretly holding shares in these promising companies was simply to obtain substantial financial returns in the future, without seeking any controlling stake or say in the company.
If there is too much interference, the company's future trajectory may develop in a different direction because of him, rendering his advantage as a time traveler meaningless.
Therefore, he never intended to disclose his shareholding information.
Moreover, the fact that they hold shares in so many giants would undoubtedly cause a huge uproar in global capital markets if it were ever made public.
Therefore, he has always kept a low profile and made a fortune, hiding Huanyu Investment Company under layers of shell companies without revealing any trace.
The situation is different with the shares held by the public. Since he intends to gain a voice in the public sector, his shareholding in the public sector will have to be made public sooner or later.
"Alright, Zhixue, starting today, you'll help me set up a team specifically to secretly increase our holdings of Volkswagen's stock. As for how much to hold, let's start with 20%. I'll decide whether to increase our holdings further then. Remember, don't alert the market; complete the increase quietly!" Lin Haoran said directly.
Since the Lower Saxony state government in Germany holds 20.1% of the shares, he will increase his stake to 20%. After the announcement, he will see how the government reacts and then make further plans.
If he increases his stake to 20% and the Lower Saxony state government's attitude is one of cooperation rather than confrontation, then he can temporarily maintain this percentage and work with the state government as the second-largest shareholder to promote Volkswagen's Asian strategy.
If the state government shows resistance, then he will consider whether to continue increasing his stake, since the shareholding ratio itself is still a bargaining chip that can have an impact on the shareholders' meeting.
Although Su Zhixue didn't understand why his boss would suddenly ask him to secretly buy up a large amount of public stock, he didn't ask any further questions.
His decision to only act as a boss suggests he's seen some investment opportunity among the public.
"Okay, boss. I will arrange for the team to secretly increase their holdings of Volkswagen shares as you request. Based on the current trading situation of Volkswagen on the Frankfurt Stock Exchange, the average daily trading volume is about 80 shares."
Without disturbing the stock market, the daily stock purchases can only account for 15% to 20% of the total daily trading volume. It will take a maximum of about six months for Huanyu Investment Company to achieve your goal of holding 20% of Volkswagen's stock! Su Zhixue quickly calculated it.
Upon hearing this, Lin Haoran frowned.
Six months, or half a year, is a bit long.
However, the impact is not significant.
"In that case, you can also see if there are any institutions that hold a large number of Volkswagen shares and want to sell them. We can directly negotiate an acquisition."
When absorbing market demand, don't be too fixated on buying only 15% to 20% each day. If trading volume increases on certain days, you can buy more. The key is to be flexible and not rigidly adhere to a fixed percentage.
Su Zhixue replied, "Understood. I will adjust the buying pace flexibly according to the market situation. If the trading volume increases significantly on a certain day, we will appropriately increase the buying ratio. If the trading volume shrinks, we will reduce the buying to keep the overall pace from being disrupted."
Regarding the institutional issue, we don't have Volkswagen's internal information, which makes things a bit difficult. However, I'll try my best to leverage European resources to see if there are any interested sellers.
"Internal Volkswagen data? I'll see if I can get it for you. You're in charge of acquiring it from the secondary market first. Contact me anytime there's progress." Lin Haoran said, then hung up the phone.
After hanging up with Su Zhixue, Lin Haoran did not go back to his bedroom to rest, but instead dialed John Reed's number again.
After the phone rang a few times, John Reed's voice came through: "Lin, it must be late at night in Hong Kong, right? Calling at this hour, it seems like it's something important?"
“I do have something important I’d like to ask you, John. As one of the world’s leading investment institutions, does Citigroup have any of the latest internal data on Volkswagen or Citigroup’s analysis reports? If so, as the executive director, I would have the authority to access them, wouldn’t I?” Lin Haoran asked with a smile.
"Yes, that's right. Volkswagen is considered one of Europe's blue-chip stocks and a core holding for many investors. Citigroup's research team publishes detailed tracking reports every year. Furthermore, Volkswagen is currently in an expansion phase and is constantly seeking more financing. Therefore, the group's recent directions are generally faxed to us, their partner banks, so we can assess whether to provide financing support. I'll have someone compile the information and fax it to you shortly!"
"Lin, why are you suddenly interested in Volkswagen? Do you want to acquire it?" John said half-jokingly.
"That's impossible. Everyone knows that Volkswagen is one of the backbones of German industry. The Lower Saxony state government holds 20.1% of the shares and special voting rights. It's unrealistic for anyone to want to acquire Volkswagen."
"As for the reason, it's a trade secret for now, John, I'm sorry I can't tell you at the moment!" Lin Haoran said with a smile.
John Reid was his closest ally at Citigroup, but he didn't need to tell him his decision now, for fear of accidentally causing Volkswagen's stock price to surge and significantly increasing the cost of his share purchase plan.
Although John Reed was his closest ally at Citigroup, in the capital markets, any information can be leaked through unexpected channels, especially when it involves blue-chip stocks like Volkswagen.
The more people who know, the greater the risk.
John Reed clearly understood this as well, and didn't press further. He simply smiled and said, "Understood. It's a trade secret, so I won't ask any more questions. I'll have someone organize the information and fax it to you right away. Just wait a moment by the fax machine. I won't tell anyone about this, Lin, so please don't worry!"
"Thank you," Lin Haoran said. "Then I'll have to trouble you."
“No trouble at all. You’re an executive director at Citibank, this is all I should do!” John Reed said before hanging up the phone.
Hearing the busy tone on the other end of the phone, Lin Haoran put down the phone, leaned back in his chair, and let out a soft breath.
Citibank had internal information, which certainly made things easier for him.
He probably knew that Volkswagen began expanding overseas in the 80s, especially targeting the Asian market.
However, he was unclear about the specific timeline and strategic plans.
Citibank's internal documents can fill these information gaps, giving him a more comprehensive and accurate grasp of public sentiment.
He glanced at the fax machine on his desk, then stood up, walked to the window, and looked out at the deep night.
The night on Barker Road was quiet, with the city lights in the distance twinkling in the darkness like stars scattered in the night.
He stood there for a while, then heard the fax machine ring. After picking up the receiver to confirm, he heard the fax machine beep once and then start humming.
The fax machine slowly ejected sheets of paper.
The first page is the cover of Citigroup's latest analysis report on Volkswagen, printed with the Citigroup logo and the word "Confidential".
He picked up the first page and quickly glanced at the table of contents: company overview, financial analysis, equity structure, major shareholder activities, recent strategic plans, risk warnings...
The content is very comprehensive, much more comprehensive than what Cui Zilong investigated!
It must be said that publicly available information and internal information are indeed incomparable.
He sat down and began to turn the pages one by one.
The report is rich in data and insightful in analysis, providing detailed discussions on Volkswagen's financial situation, management structure, and market competition landscape.
In particular, the section on equity structure not only lists the shareholding ratios of major shareholders, but also analyzes the intentions and possible moves of each shareholder.
He saw a page that mentioned: "There are recent signs that some German institutional investors are adjusting their asset allocation and may reduce their holdings of non-core shares."
Allianz and the Bavarian State Pension Fund are both likely to sell some of their Volkswagen shares in the coming months.
He continued flipping through the pages and saw that the last few pages of the report were an analysis of Volkswagen's recent strategic plans.
The report mentions that Volkswagen's management is discussing a new expansion plan for the Asian market, which may include establishing a joint venture factory in mainland China and setting up an assembly base in Southeast Asia.
The progress of cooperation with the mainland is described in great detail.
"Interestingly, SAIC in mainland China has actually been in contact and negotiations with Volkswagen for some time now. More than three months ago, they even officially signed a 'Contact Agreement' and finalized the core framework for cooperation. However, they have not yet officially signed the agreement, the joint venture has not been established, and Volkswagen has not yet truly confirmed its cooperation with SAIC."
Even more interestingly, prior to signing the contract, SAIC and Volkswagen planned to assemble a Santana sedan, with almost all its parts imported from Germany, at SAIC's Anting plant in Shanghai for testing, in preparation for production trials. The test was scheduled for April, next month.
Lin Haoran looked at the internal document and couldn't help but fall into deep thought.
When he was in Beijing, that leader never mentioned this matter to him.
However, the data shows that 97.3% of the parts in this assembled test vehicle are imported from Germany. Only common parts with very low technical barriers, such as tires, body markings and on-board tools, are supplied by local manufacturers in Shanghai, accounting for less than 3% of the value of the whole vehicle.
Most importantly, SAIC's purpose in cooperating with the mainland is not for export, but for the mainland market; it has never considered export.
Therefore, even if the mainland achieves this cooperation, the profits it will gain will be far less than it imagined, and as for foreign exchange, it will receive nothing at all.
He knew that SAIC would indeed cooperate with Volkswagen in the future, and that SAIC Volkswagen was a well-known company in his previous life, but that was the result of many years of accumulation.
In the early 1980s, even SAIC, a leading domestic automobile manufacturer, had almost no independent production capacity.
In the early stages of the joint venture, the localization rate was pitifully low, and the vast majority of the profits were taken by the foreign partner, while the mainland gained more tax revenue, employment, and a platform for technical learning.
His envisioned profit sharing and foreign exchange earnings are basically unrealistic at this stage.
In fact, even if he doesn't interfere with the development of the mainland's automotive industry, these international brands will still rush to enter the mainland and choose to form joint ventures with car companies.
However, these automakers clearly treat the mainland market as a low-level assembly base, rather than a true technology partner.
In their eyes, the mainland offers cheap labor and preferential policies, not reciprocal technological cooperation.
They are all willing to form joint ventures in the future, but they are unwilling to share core technologies or accelerate the localization process.
For example, SAIC and Volkswagen would have officially signed an agreement on October 10, 1984, and SAIC Volkswagen would have been officially established in March 1985. Even without Lin Haoran's interference, these things would have been carried out as scheduled.
History has proven that the cooperation between SAIC Volkswagen and China will become a benchmark for joint ventures in the mainland automotive industry, ushering in an era of "market access for technology" that will last for decades.
But Lin Haoran knew in his heart that in the early days of this era, the mainland had not really acquired many core technologies.
Improving the localization rate is a long and arduous process. It took SAIC Volkswagen's first model, the Santana, more than a decade to increase its localization rate from less than 3% to over 90%.
Over the past decade or so, the vast majority of profits have flowed into the pockets of the general public, while the mainland has received more tax revenue and employment, and the joint venture vehicles produced there are sold in the mainland market.
So you want to earn foreign exchange through the general public?
It seems I'm overthinking it.
In this light, Lin Haoran suddenly began to understand why that leader was so shocked when he heard that he wanted to acquire an international car brand and then build a production plant in mainland China.
What shocked the other party was perhaps not only their own extravagance, but also the fact that they saw another possibility: not the passive waiting of "low localization" and "inability to export", but the active choice of "owning their own brand".
If Lin Haoran can really acquire an international car brand and then build a factory in mainland China for production, then the mainland's car industry will no longer need to go through that long process of localization.
Because the mainland knows that with a patriotic businessman like Lin Haoran around, everything is negotiable! (End of Chapter)