Chapter 651 Container Terminal Opening

"Jiaxing swallows up Milk" was the core report of Hong Kong's mainstream newspapers on May 5, marking the end of the acquisition battle that lasted about a month.
Many reporters began to seek interviews with top executives of Hong Kong Land or Jardine Matheson Holdings like flies. Some also tried to interview Zhou Xilin, the former chairman of Dairy Farm, but most of them were turned away.
After entering the 70s, as the Western concept of "freedom of reporting" gradually entered Hong Kong, many journalists began to use any means necessary to report news. Celebrities in the entertainment industry were the first to be affected, and the wealthy class was better off for the time being, but compared to before, they were not as casual anymore.

By the end of May, Hong Kong Land continued to exchange shares for shares over a period of about ten days, and acquired 5% of Dairy Farm's shares. It then applied to the Supreme Court of the Hong Kong government for privatization and carried out a compulsory acquisition of the remaining shareholders.
In other words, there are still 10% of the shares out there, but these shares no longer have the value of "stocks". Instead, they are simply converted into cash that can be redeemed at any time at the previous acquisition amount, and no longer have any authority;
This is also to protect the interests of the company. Otherwise, any acquisition will not be able to acquire 100% of all shares. The same law is also valid for real estate. For example, if 90% of the people in a place agree to a demolition price, the court will force the remaining 10% to be fixed at a mandatory price, thus avoiding the emergence of extreme nail households.

After successfully acquiring the Dairy Company, Henry Keswick immediately arranged for people to communicate with Changxing Real Estate and sold the Dairy Company's ice factory in Causeway Bay to Changxing Real Estate at a very low internal price. However, because the ice-making business was of some help to Watsons, it was later transferred to Watsons and the land will not be developed for the time being.

From then on, everything was settled. The first large-scale hostile commercial merger in Hong Kong’s history ended with a perfect success for Hong Kong Holdings.

At the Changxing Group headquarters building, Fang Xianming brought a stack of information to his boss and said happily, "Mr. Yang, this time when Zhidi acquired Dairy, we used a stock-for-stock swap to successfully acquire 3.32% of Zhidi's shares in just one month."

"3.32%. Considering our previous shares, how many shares do we have now?" Yang Wendong asked.

Many years ago, Yang Wendong arranged for Changxing Financial Company to gradually and slowly acquire shares of Hutchison Whampoa, Wharf Holdings and Dairy Farm International, but the main focus was on Wharf Holdings shares. Relatively speaking, less money was invested in the other two stocks. In addition, Hutchison Whampoa was a larger company and was also limited by funds, so the proportion of its shares was definitely much lower than that of Wharf Holdings.

Fang Xianming replied: "At the beginning of the year, we had about 5.5% of Hong Kong Land shares. Now, it is almost 8.9%."

"That's fine too." Yang Wendong nodded and asked, "The stock price of Jardine Matheson has started to fall recently, right?"

In order to save money, Hong Kong Holdings bought its own company's shares at a high price so that it could easily exchange for more Dairy Farm shares.

But if they want to maintain their high stock prices, in addition to releasing various news, they also need to invest real money. Now that they have acquired the milk company, they will naturally stop investing in this area, and the stock price will naturally fall normally. Even Swire Properties may take the opportunity to cash out and make another profit.

Fang Xianming said: "Yes, the stock price has fallen quite a bit. Do we still need to continue the acquisition?"

"We will definitely acquire it in the long term, but now that we know the stock price is going to fall, it would be foolish to buy it again." Yang Wendong smiled and said, "We can take advantage of the opportunity to cash out part of it and push the price down a bit. Once the market panics, there will be more selling and the price will fall even more. Then we can take advantage of the opportunity to acquire it and it won't be easily discovered by outsiders."

If you just want to make a simple arbitrage, you naturally have to sell it slowly. However, considering that Swire or some other smart people may have the same idea of cashing out, this trick probably won't work, and everyone may want to run away.

Therefore, it is best to cash out quickly as soon as possible and after lowering the price, you can take the opportunity to purchase in large quantities without attracting too much attention. After all, this period is too chaotic.

"Okay, I'll arrange it right away." Fang Xianming then asked, "What about Wharf Holdings? While everyone's attention was on Jardine Matheson and Dairy Farm, I bought another 2% of the shares. Our stake is now close to 29%."

"Wait a little longer, let's see what Hutchison does first." Yang Wendong said after thinking for a moment.

Originally in history, the stock market crash in 1973 happened shortly after Landmark Milk was launched. A large amount of funds became active, triggering a crazy surge in the Hang Seng Index, and then the bubble burst;
But now, due to various reasons, the launch of Jardine Milk was brought forward by half a year. He was not sure when the stock market crash would break out, but the Hang Seng Index was close to 800. Although it seemed far from the peak of 1700, Yang Wendong also knew that the last madness would only last a few months.
In addition, once Hutchison Whampoa makes a move on HK Electric, the variables will be even greater. It won't hurt to wait a little longer. With the shares of Wharf Holdings that he holds now, he is basically in a close position. At worst, he can be ruthless and make a high-priced acquisition like Pao Yue-kong did in history and he can still succeed. Of course, there is no need to do this unless it is absolutely necessary.

As the share price of Hong Kong Land gradually fell, panic once again emerged in the hearts of the public. At this moment, many people realized that they had been cheated by Hong Kong Land. Many people also went to Hong Kong Land's headquarters to cause trouble, but they were naturally easily suppressed.
These people have no reason in the first place. Stock trading is free. If the price goes up, you are happy at home, but if the price goes down, you come here to ask for explanation?

Once you enter this industry, everything is a win or lose for yourself. Not to mention that Swire did not break the law, even if it was a big scam like the future Carrian Group, Chen Songqing was just punished in the end. When you enter the market to play games with the capital predators, and even think that you can make money from them, you are destined to lose.

Therefore, it is better for normal people not to touch the stock market. For example, in the previous life, if you don’t play in the mainland’s A-share market, you will win over 95% of the people who play in it.
However, the decline in Hong Kong Land's share price is a return to normal value, and has little impact on the entire Hong Kong stock market or the Hang Seng Index. Land prices are still rising, and the share prices of too many real estate companies that own properties have naturally risen as well. Most shareholders can still make high profits from it, although they are all paper data;
In consumption places such as Central, Admiralty and Causeway Bay, there are bustling crowds and heavy traffic. Seafood and abalone are often in short supply, and there are seriously insufficient taxis nearby. If you want to get a taxi, you must have a bill in your hand while waving, which is a separate tip for the driver.

There are too many wealthy people in Hong Kong today, and all kinds of hotel services are no longer enough.
Soon it was June, and Hong Kong welcomed another happy event. Several container terminals that started construction two years ago began to open one after another, marking the spring of Hong Kong's industry. "The price has dropped a lot, but it's a pity that the monopoly didn't last too long." Yang Wendong looked at the latest container freight prices and smiled.

Zheng Yuhua said: "Yes, at the beginning we were the only wharf, and so many factories in Hong Kong needed containers, so the price was naturally very high, and the profit we earned was also very high;
Now that several other terminals have opened, the competition will naturally drive prices down.”

It’s not that Changxing Group has to suck blood from some factories, but under the free market, an early container terminal was simply not enough to meet the needs of the Hong Kong market. So many factories have to ship goods via containers, and under the situation of supply and demand, they can only raise prices. Otherwise, how can they decide whose goods to transport?

Now that there are more docks, prices will naturally return to normal.

Zheng Zhijie also said: "Yes, the good days are over. The Hong Kong government has also begun to investigate the operation of the terminal. They will restrict the absolute monopoly. Like water, electricity and gas, the terminal will also become part of the infrastructure."

"Yes, that's normal. The Hong Kong government should do the same." Yang Wendong nodded and said, "And if the dock fees in Hong Kong are too high, it will only damage the industry and trade in the long run. We should also look further ahead."

Although Hong Kong has many monopoly companies and no antitrust laws, the Hong Kong government does have control measures for such matters;
For example, there are several licenses issued to different companies, and the profit margins of monopoly companies will be limited through investigations. For example, the two major power companies cannot raise prices whenever they want. Every price increase has to be evaluated by the Hong Kong government. Although there may be tricks involved, it is much better than the government not caring about it.

The same is true for the docks. If several dock companies dare to negotiate and raise prices together, they will definitely be dealt with by the Hong Kong government. Even in other countries, infrastructure such as docks are definitely strictly controlled. Even if merchants have a certain degree of freedom, they cannot do whatever they want. Otherwise, Hutchison Whampoa in its previous life would have controlled so many docks and raised prices to the sky long ago.

Zheng Zhijie said: "Yes, with more containers, industrial transportation has become much more convenient. In addition, global freight rates have also dropped recently. Hong Kong's industrial development is better than before. Even industrial land has increased a lot."

"Industrial land is indeed a good investment. You can continue to invest more." Yang Wendong followed.

Although the timing of the next real estate crisis is uncertain, Changxing Real Estate is already making preparations and making appropriate cuts. However, industrial real estate has little to do with the real estate crisis because its core is industrial demand. For example, after 85, Hong Kong's housing prices soared, and as a result, industrial land collapsed completely.

"Okay." Zheng Zhijie agreed.

Zheng Yuhua also said: "Mr. Yang, many of my second-hand ships have been sold or sent for dismantling. Now that freight rates have fallen, the price of new ships has also fallen. Should we buy new ships?"

"No, we won't buy new ships for now. Let's talk about it later. Suez is still an uncertain factor." Yang Wendong replied.

The Suez Canal has been closed for seven years. This incident caused a surge in shipping prices in the early days. Several major shipping companies in Hong Kong made a fortune. One new ship a year can pay for itself. After that, it just sits back and counts the money.

But in recent years, shipbuilding in various places has also been going on at full steam, so with more ships, freight rates have also dropped appropriately;
The first oil crisis was about to break out, and the Suez Canal was about to open in 75. These two events were a major blow to global shipping. Combined with the second oil crisis in 78, it led to a shipping crisis for more than a decade after the 80s, which did not improve until the Asian economy boomed.

In history, only Pao Yu-kong successfully abandoned ship and landed. Other Hong Kong shipping giants all suffered heavy losses. The Dong family of Orient Overseas was even forced to give up their shares to save the company. The whole family became wage earners and finally saved their own company, but it had little to do with their family.

Zheng Yuhua said: "Okay, then I will just keep operating here."

"Well, that's it." Yang Wendong continued, "The Hong Kong government is planning to hold a celebration ceremony in Kwai Chung. We will go together then."

"Yes, Mr. Yang." Zheng Yuhua and Zheng Zhijie both agreed.

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(End of this chapter)

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