Chapter 036: Stock Market Manipulation
“???” What the f*ck are you doing sticking so close just to say that! ?
Qi Yu’s bones went soft. He almost placed his entire weight against Fu Yansheng.
Despite Fu Yansheng’s warning, the current situation didn’t appear as though it would permit him to not participate. A lot of people were watching him. Meng Wenhui and Si Hang were waiting for his answer…
“I…” Feeling the pressure on his waist, Qi Yu trembled again. He suddenly thought, ‘Teacher Fu must have a reason for stopping him. Although it would be a bit of an embarrassment, he was, of course, more willing to believe this man behind him than Si Hang.
“I myself won’t join. How much do you want to borrow, Wenhui?” Qi Yu finally said.
“A hundred thousand. A hundred thousand, you have that much, right?” Meng Wenhui’s face was glowing.
“You can borrow up to fifty thousand,” Qi Yu frowned, “I don’t need you to share the returns with me. Whatever you earn from it, you can keep yourself.”
When Qi Yu said that he was only willing to lend fifty thousand, Meng Wenhui’s lips curled, thinking it wasn’t enough. When Qi Yu said that he wouldn’t need to share with him, he immediately smiled and said, “Okay, okay! I know you’re good to me!”
Seeing that he wasn’t going to join, Si Hang didn’t seem to care too much. After all, this was the first time Qi Yu has heard of this kind of thing. It was inevitable that he would be a bit cautious.
Qi Yu breathed a sigh of relief. He then looked indignantly at Fu Yansheng and yanked the other’s hand away — What did this man think his waist was? A switch to control him with? Tightening one second, loosening the next!
The man was forced to raise his arm and rest it on the back of the sofa again.
“Why wouldn’t you let me participate?” Qi Yu asked in a low voice.
“I’ll tell you when we leave…” Fu Yansheng’s expression held a faint gentleness, as if he was very satisfied with Qi Yu listening to him just now.
***
This party didn’t end until midnight. With Fu Yansheng’s “close company”, Tang Weiye finally gave up on approaching Qi Yu and inviting a rebuff.
As they were leaving, Qi Yu and Tang Weiye met face to face once again. Qi Yu found that the other still had a stinky expression on his face… He also didn’t know if Tang Weiye had just seen Fu Yansheng’s ambiguous behavior towards him but his eyes were filled with so much jealousy that they were almost flashing green.
Both of them had drank alcohol, so Fu Yansheng asked a driver to help him drive the Lamborghini back. By coincidence, this was when Tang Weiye ran into them.
At that time, they were waiting for the car at basement one. Tang Weiye looked at Fu Yansheng and said sourly, “Fu Xiong, I didn’t get to ask. What does your family do?”
Si Hang and the rest of the group got together because of their family background. Sometimes, making friends, was less about who the person was and more about which consortium was behind him.
Faced with Tang Weiye’s inquiries, Fu Yansheng didn’t try to hide. He said with a smile, “They don’t do anything. They’re just ordinary people.”
Tang Weiye didn’t quite believe it, “Ordinary people?”
Fu Yansheng crossed his arms and said, “En.” He added, “Just ordinary people working for the country.”
A hint of surprise flashed across Tang Weiye’s face.
The car came. Fu Yansheng paid no more attention to Tang Weiye as he opened the door for Qi Yu. The two off them sat in the back row, getting in one after the other.
Once the car to left the No. 88 Huaijin Road clubhouse, Qi Yu asked Fu Yansheng, “What did you mean by ‘ordinary people working for the country’? Why did Tang Weiye get that kind of expression?”
Fu Yansheng said calmly, “The meaning of this statement is very broad. He could choose to take it literally. As long as it’s someone who pays taxes, then they are all working for the country. These people include you, me, him as well as everyday citizens. Narrowing it down, he might take it that my family has a government background. In that sense, those working for the country may be an ordinary civil servant or a high-ranking officials whose authority is too great, making their identity inconvenient to expose… However, judging by his expression just now, he probably chose to understand it as the last option. After all, I am with you.”
Qi Yu laughed. How did Teacher Fu have so many of these tricks?
We’re sorry for MTLers or people who like using reading mode, but our translations keep getting stolen by aggregators so we’re going to bring back the copy protection. If you need to MTL please retype the gibberish parts.
But speaking of, Qi Yu really hasn’t inquired about Fu Yansheng’s background yet. At this moment, he couldn’t help but curiously ask, “Then what exactly does your family do?”
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Fu Yansheng lightly “tsk”-ed. “Just half an hour ago, you were leaning in my arms with a face full of enjoyment. Are you now turning your face and refusing to acknowledge me?”
“……???” Qi Yu retorted irritably, “Who had a ‘face full of enjoyment’? You were obviously the one who dragged me to lean over!”
Qi Yu had to admit though that just now, his heart did indeed feel a bit moved…but that was due to a combination of alcohol, music and Fu Yansheng’s own ambiguous behavior. Now that he has calmed down, naturally, he couldn’t tolerate Fu Yansheng’s continuing to confuse right and wrong.
Fu Yansheng looked at him for a couple of seconds and suddenly said, “They work in schools.”
“Ah…huh?” Qi Yu was still immersed in his self-wavering and self-denial of his sexual orientation. His brain’s reaction speed couldn’t keep up with how fast Fu Yansheng changed topics!
Fu Yansheng turned his gaze away and said seriously, “I said that my family all work in schools.”
Qi Yu: “……”
Qi Yu: “Oh…”
No wonder Fu Yansheng had a bookish side to him and he liked having people call him ‘teacher’. It seemed he had been influenced by his family.
Qi Yu remembered and asked, “By the way, you haven’t told me about Si Hang’s stocks. Why wouldn’t you let me participate?”
Fu Yansheng asked him in reply, “When you heard what Si Hang said, what was your first reaction?”
Qi Yu: “Ponzi scheme?”
A Ponzi scheme is a kind of pyramid scheme in the financial field. The first to come up with it was an Italian speculator named Charles Ponzi. The main method was to use a high return on investment as bait to defraud a steady stream of investors. The investments from these new investors were used to provide the high returns for the people at the top of the pyramid. Since the company or enterprise they invested in wasn’t actually profitable, a large part of the deceived investors would surely lose all their money in the end.
As a matter of fact, since Qi Yu was a child, Qi Yuancheng had taught already him to be vigilant about these kinds of pies falling from the sky. However, given Si Hang’s identity and background, it was difficult for Qi Yu to associate him with a “scam.”
After all, the people in the private room at the time were all Si Hang’s closest friends. Even if Si Hang wanted to deceive people, it seemed unlikely that he would do it to his friends.
… Was this just the beginning of a Ponzi scheme?
However, there were senior talents like Xu Yizhou guarding the company, and the Si Family was not short of this money. Why would Si Hang do such and thing and risk ruining his reputation?
Fu Yansheng waited for him to think for a while before he put his arms up and said, “The company that Si Hang asked you to invest in actually exists and is profitable.”
“It’s not a Ponzi scheme?” Qi Yu was surprised. “What is it then?”
Fu Yansheng didn’t answer and asked, “Do you know that behind the stock market there could be some mysterious large investors that do zuo zhang?”
“I know.” Qi Yu nodded, but he had heard the concept of zuo zhang but he was a little at a loss about how they actually operate.
Fu Yansheng explained, “These large investors are also called zhuang jia. They are in opposition to retail investors. They usually use hundreds of millions or even billions to control the price of a stock. Their control over a certain stock could go as high as 50%. Normally using methods such as balloting, canvassing votes, smashing the plate, absorbing chips, pumping up stock prices and off-loading at high prices, the actions of these manipulators would directly or indirectly affect the stock price in the secondary market and the income of retail investors.”
Qi Yu: “Is Si Hang’s stock related to a zhuang jia?”
“That’s right. Since the company that Si Hang asked you all to invest in exists and has actual operations, it is very likely that there is a zhuang jia behind this company and based on the information disclosed by Si Hang and this company’s recent stock trend, I’m guessing that they are at the stage of absorbing chips or short-term pumping up the share price…” Fu Yansheng looked at Qi Yu, “Remember that person who came in to inform Si Hang?”
Qi Yu: “En…”
Fu Yansheng: “This person is probably someone who understands the inside story. When zhuang jia is working on a stock, in order to prevent the regulators from catching hold of a handle, he may pull in some large private equity investors or wealthy retail investors to act together. The money that Si Hang and the others make is probably reward for helping the zhuang jia control the direction of the stock.”
Qi Yu said in a daze, “So, will everyone really get so much profit when the time comes?”
Fu Yansheng nodded, “There is a great probability that yes, they will.”
Qi Yu breathed a sigh of relief. Now he wasn’t afraid that Meng Wenhui was being deceived. But he was also puzzled, “Since this is a business that is sure to make money, why didn’t you let me participate?”
Fu Yansheng looked at him, “I just said that when zhuang jia are working, they would guard against the regulators. Stock market zuo zhang and Ponzi schemes are both essentially using human weaknesses and the masses’ lack of information to harvest chives. The only difference is that a Ponzi scheme is blatantly illegal fund-raising fraud. And stock market zuo zhang is not against the law so long as they are not suspected of insider trading and they do not disrupt the order of the financial market.”
Qi Yu didn’t know why but he felt that Fu Yansheng’s eyes that were looking at him were a bit sharp as he said these words. It was as if he was trying to dig out all the unconscious greed in his heart, expose it to the sun, and flog it fiercely.
Qi Yu looked down and said, “Well, I listened to you, didn’t I?”
“Qi Yu,” Fu Yansheng suddenly called his name and asked slowly, “Someday in the future, as an owner of capital and as a businessman, have you ever thought about what kind of principles you must adhere to?”
Qi Yu was taken aback. This question made him sit there, dazed stupid, unable to answer for a long time.
What principle? Not breaking the law was the principle.
However, he once again felt that this wasn’t the answer that Fu Yansheng wanted to hear.
As expected, the other party did not wait for long before he changed the subject. “How is Mei Wei’s investigation?”
“Eh, I haven’t made any progress.” Qi Yu looked out the window, a little annoyed at his own uselessness.
Fu Yansheng was silent for a moment. He asked him, “Are you free on Saturday?”
“Saturday?” Qi Yu looked back.
“Tomorrow is Saturday.” Fu Yansheng reminded him.
“Oh…” Qi Yu has been working non-stop for ten days. He has dragged Wu Shuang to accompany him to work overtime to conduct investigations, completely forgetting that tomorrow was the weekend. “I was planning to head to Ning Cheng with Wu Shuang. Both the textile factory and the garment factory are located in Qiu Zheng near Ning Cheng. I wanted to visit it.”
Qi Yu glanced at the time on his phone. “But it’s already so late today and Wu Shuang didn’t get to have a break last weekend. I’ll message him later to have a day off tomorrow. We’ll just go the day after tomorrow.”
“When it’s time to rest, you rest.” Fu Yansheng looked at his face and said, “Look at you, you’re letting your face tan until it’s beginning to look like a monkey’s butt. You’re really going all out for this?”
Qi Yu said, annoyed, “Who are you calling a monkey’s butt?”
Fu Yansheng: “I’ll go with you the day after tomorrow.”
Qi Yu was stunned. “You’ll go with me?”
Fu Yansheng raised his eyebrows. “Why? I rarely have time on weekends. You don’t need my help?”
Qi Yu: “…I do.”
The car arrived at the door of the hotel where Qi Yu was staying. Before Qi Yu got off the car, Fu Yansheng added, “Will you be in the hotel tomorrow? I’ll come see you after lunch. Let’s discuss what you’ve already investigated before.”
Qi Yu: “…………”
————
【Little Theater】
Fraction: We’re both undercover but why does he get to have a beauty in his arms while I can only sit on a cold bench?
Complex Number (smokes and smiles): Just goes to show that my royal wife is very enlightened.
7 Fish: Royal, my ass! Let go of laozi, you salted pig hands! (╰皿╯)
————
Fish: He’s going to check my homework! (Insides all twisted.jpg)
Translator’s Note: Sleepy Little Mushrooms’ Overview on Stock Market Manipulation:
The stock market as most people know it, is the secondary stock market. This is where people who already own stocks (that they got either through an initial offering or through the secondary market) buy and sell their stocks.
The prices of stocks change based on supply and demand, which is why, for most stocks, there really aren’t very big swings in their prices (ie. Their prices aren’t very volatile.)
Because the prices don’t swing a lot, it’s not very appealing for those who want to get rich quick. (There is day trading but we’re not going to get into that.) This is where stock manipulators come in.
Stock manipulators, as their name implies, control or influence greatly the movement of a particular stock’s price. These are the zhuang jia (manipulators) that do zuo zhang (stock manipulation) that FYS mentioned.
How do stock manipulators manipulate the price of the stocks? It depends on a lot of things like (but not limited to) the resources the manipulator has at his disposal, the specific situation of the stock he’s targeting and the regulations in a specific country/stock market.
The “balloting, canvassing votes, smashing the plate, absorbing chips, pumping up stock prices and off-loading at high prices” that FYS mentioned are all tactics used in the Chinese stock market. They may not have an apple-to-apple equivalent in the Western world’s stock markets due to the different regulations.
But in general, stock manipulators would artificially inflate the price of a stock by making it appear that the stock price is on the rise. This would entice individual investors or retail investors (investors like you and me) to buy the stock, which drives up the price even more. Once it reaches a certain price, the stock manipulator would suddenly unload all or a great part of his stocks. This drives the price of the stock way down but by that time, the stock manipulator has already sold his shares at the high price. So, in these scenarios, it is the retail investors who are left with the short end of the stick.
Si Hang scoffed when FYS suggested investing in a blue chip stock. This is because blue chip stocks, or stocks of trusted/established companies, are usually stable. There are too many people/institutions trading these stocks, which means that if anyone wanted to make it move a certain direction he would need a shit-ton of money because he would essentially be competing with hundred of millions of investors. That’s why stock manipulators usually go for stocks of smaller companies.
Trying to manipulate stocks isn’t without risk for the stock manipulator. There’s a lot of things that could go wrong. Example, he could overestimate how much the retail investors are willing to buy. Say that he has a hundred thousand stocks, he wants to sell at $30. He’s only able to sell a thousand stocks at $30, there are no more takers at that price. He’ll have to sell the rest at a lower price.
Is it legal? Uh……………..it’s a gray area, as FYS has said. It also differs from country to country. Some forms of market manipulation, like insider trading, are clearly illegal in most every country. A lot of the times, the difficulty lies in proving it. If the regulators can prove that someone has been manipulating the market, they would most certainly take action. This is why the manipulator in this story invites Si Hang and his group to take part. If the manipulator moved on his own (provided he has enough money/resources to do so), the regulators would easily catch him. But if he hides among all these rich investors, its harder for the regulators to prove that they all worked together to manipulate the price.
Regardless of whether it is legal or not, it is most certainly unethical.
Phew…I hope I helped clear that up somewhat.
For more reading, you can check this out.
uwah thanks for the explanation translatoor-san!! really really helpful hehe
stock learning as breakfast….
thanks for your translation update!
can’t wait for our little fish to realise his feelings 🐡❤🦊
Thank you sm for the chapter and explanation. I learned abt investment recently and this is helping!
thank you for the explanation! it was really good!
Your explanation are awesome~ 👍 Thanks for the chapter<3
Cause my brain needs to go through it again:
A – 25B – 17C – 17D – 17E – 07Others (1% each) – 17Total number of people in the room – 22
A, B, C and D together hold 76%. They are partners and majority shareholders. For E to compete, he needs 51% at least.
D already likes E. E now has 7 + 17Amongst the seventeen minority shareholders, 2 are friends. E now has 7 + 17 + 2 = 26
It’s now A, B, C and 15 minority shareholders vs E , D and two minority shareholders
For E to win 51%, he has 3 methods.
Strategy 1 – Pull in A.E – 7 + 17 + 2 + 25 = 51%Strategy 2 – Pull in either B or C, along with 8 minority shareholdersE – 7 + 17 + 2 + 17 + 8 = 51%Strategy 3 – Pull in both B and CE – 7 + 17 + 2 + 17 + 17 = 60%
pants for air
Oh dear lord that got jumbled up
For E to win 51%, he has 3 methods.
Strategy 1 – Pull in A.E – 7 + 17 + 2 + 25 = 51%Strategy 2 – Pull in either B or C, along with 8 minority shareholdersE – 7 + 17 + 2 + 17 + 8 = 51%Strategy 3 – Pull in both B and CE – 7 + 17 + 2 + 17 + 17 = 60%
Yep I give up, TL-sama bless youuu ;u;
Thank you for your explanation, translator! It really helped me and I learned a lot.
thanks for the chapter!
Complex Number have his future wifey in his arm, while Fraction can only sit in the corner. And the most pitiful xiao Square has been working his ass off.. Being in the same secret society club doesn’t mean y’all get to enjoy the equal level of privilege heh…
Thanks for the big explanation in the end…i got it somewhat❤️