Investment Life

CHAPTER 23

From January 19th to February 1st, 1992, the ongoing sale of stock subscription certificates, ended very tepidly on the eve of the Spring Festival.

As the first subscription-style new stock issuance in mainland China, the 92nd edition of the Shanghai stock subscription certificate was actually unpopular when it was officially launched. The final sales volume earned about 2.1 million yuan with less than 100,000 copies sold. And perhaps, because this subscription sales method was too special, far from the expectations of securities firms, panic buying and selling did not occur.

The stock subscription certificates were valid for use throughout the year and there was to be four lotteries from which holders could buy newly listed shares. This meant that there was great potential danger. Who could guarantee that each subscription certificate could successfully result in winning the right to purchase shares? At the same time, the price of 30 yuan per certificate exceeded the bottom line that most people could afford. This coupled with the restriction that permitted only Shanghai residents to buy also further limited the sales threshold. At the beginning of 1992, only a dozen new stocks were announced for listing and few people dared to devote their life savings to these few stocks ...

However, Chen Yuanming knew that all this would soon look vastly different.

Shortly after the end of the Spring Festival holiday, at the gates of the Huangpu Business Department of Wanguo Securities on Guangdong Road, some second-hand dealers looking for subscription certificates began to appear. The prices they offered were all a few points higher than the original 30-yuan price. The purchases made by these dealers were based on serial numbers. For every 100 consecutive certificates, the price offered ranged from 3,500 to 4,000 yuan.

If the certificates were unregistered "white boards", the price offered could still be higher by several points. After all, when buying stocks, one needed to show an ID card and for example, while securities companies such as Shenyin Securities permitted the registration name to be changed a second time, hard-liners like Wanguo Securities absolutely refused to allow a second name change. Thus even if one were to obtain a pre-registered stock subscription certificate, the purchase will not proceed smoothly.

However, Chen Yuanming was unmoved. He just walked around the doors of several major securities companies in silence every day and inquired about the black-market prices for the certificates from the second-hand dealers. He was neither buying nor selling, but like an ordinary onlooker, he quietly observed. After half a month, even some of the scalpers had become familiar with him and some turned away when they saw him.

This went on for more than half a month, until the end of February. As the news and gossip heightened so did the black market. The price of 100 consecutive stock subscription certificates soared from its original price of 3,000 yuan to about 20,000 yuan in a blink of an eye. This was ten times the profit.

At this point, the entire subscription certificate market had become very hot. In addition to those second-hand scalpers, more and more real buyers also begun to enter the battlefield. Well-dressed elites appeared at the doors of the securities market, hoping to acquire one or two books of" white boards" to personally make a killing on the stock market.

However, these developments still could not move Chen Yuanming. What good was 10 the times profit? While this was the 1992 stock subscription certificate sale, it was but the first wave of the "million-yuan waves" that all future generations are familiar with. At this time, no matter how much you sold the subscription certificate for you were selling at a loss. Only by properly grasping the four lottery opportunities, continuously circulating funds, selling stocks and buying new shares, could you maximize your profit. In 1992, the winning rate for the subscription certificate of the four lotteries was not only 30% or 50% as the world had guessed, but more than 80% in total. Especially in the second lottery, the winning rate was as high as 50%. How could he possibly give up such an amazing profit opportunity.