Chapter 43: The Monetary Meeting Convenes

After placing a live-trading order of twenty thousand yuan to lock in the daily limit, Zhang Yang used Xu Zhiruo's simulated account to buy three hundred thousand yuan worth of ST China Textile Machinery, while Lai Weijie's simulated account remained untouched.

Subsequently, he paid no more attention to ST China Textile Machinery, turning his focus instead to sectors such as banking, insurance, and finance.

With ten o'clock approaching and the Quarterly Routine Meeting of the People's Bank of China Monetary Policy about to be convened, both market capital and intra-sector funds were currently in a wait-and-see mode.

If forward-looking remarks hinting at another "four-trillion" stimulus package were indeed to emerge, these direct beneficiary sectors would experience an instantaneous surge.

While waiting for the meeting to commence, Zhang Yang opened Baidu Tieba.

Glancing at the string of skeptical replies beneath the operational post he had published yesterday, he smiled faintly, having no intention of responding or getting into arguments with them.

In the capital markets, after all, disputes solve nothing.

If you want someone to back down, the best approach is to mercilessly slap a profit chart across their face—that is the simplest and most brutal method.

Undeterred by the skepticism, Zhang Yang opened the post-editing page and jotted down his insights on hitting the daily limit with ST China Textile Machinery.

Besides Zhang Yang, finance students like He Jing and Wang Liu, hot-money investors Liao Guopei and Chen Sanrong, and even executives from financial institutions and listed companies were all eagerly awaiting the convening of this meeting.

Whether one is trading stocks, foreign exchange, gold, or running a business, the underlying principle is always to closely follow national policy trends.

Take the period when reform and opening-up was proposed in 1978 and the collective economy was transitioning toward a market economy: the first wave of people who ventured into business may not have all made hundreds of millions, but having a net worth of over a million was virtually guaranteed.

At that time, a CRT color television set sold in Hong Kong for around 3,000 Hong Kong dollars, which translated to roughly 925 Chinese yuan.

Yet if that same CRT color television were transported and sold inland, its price would immediately triple, with market demand far outstripping supply.

It wasn't just televisions; radios, telephone exchanges, pagers, and all kinds of daily necessities yielded net profits of one to three times over upon a single resale.

Mr. Ren of Huawei made his very first pot of gold initially by acting as an agent for Hong Kong's Hongnian Company, selling 24-port program-controlled switches.

Amidst the tides of the era and the trends of the stock market, an individual's strength is minuscule, which is why everyone emphasizes going with the flow.

Even Wall Street behemoths with their massive pools of capital could not forcefully prop up the U.S. stock market trend during the dot-com bubble of 2000–2003 or the subprime mortgage crisis of 2007–2008.

Only by learning to flow with the current can one establish oneself in an invincible position.

...

Beijing, China.

Headquarters Conference Hall of the People's Bank of China.

This was the venue for the Quarterly Routine Meeting of the Central Bank's Monetary Policy. Spanning a spacious three to four hundred square meters, it was already packed with journalists and major media outlets.

Wielding their "long guns and short cannons," they aimed their lenses toward the entrance.

As time ticked away, the monetary policy committee members and key speakers attending the meeting entered the hall one after another.

"Click, click—"

Flashes flickered incessantly, the shutters sounding as if money were no object.

The state television camera instantly zoomed in on the primary speaker of the monetary routine meeting, and reporter Peng Ruixiang introduced the live-streaming audience:

"Governor Zhou Chuan has entered the venue. He is the principal speaker of the Quarterly Routine Meeting of the PBOC Monetary Policy and the chief of the central bank's monetary committee. At this meeting, he will set the primary tone for our monetary policy this year."

The year 2009 was a pivotal year for emerging from the shadow of the subprime mortgage crisis, and the first-quarter monetary policy meeting was a crucial hammer watched closely by the entire globe.

As the ancients put it, the planning of a year begins in spring, and the planning of a day begins in morning; the first-quarter routine meeting was equivalent to both spring and morning.

At this moment, Lei Bus—who was "semi-retired" in Jinshan, had invested in companies like Vancl, Duowan (YY), and Letao, and held tens of billions in cash; Jack Ma, who had launched Tmall and driven the independence of the B2C business; and Pony Ma, holding 800 million active QQ users—were all closely watching the monetary policy tone.

Domestic capital wasn't the only one paying attention; international capital was similarly fixated on the meeting.

As the clock struck ten, the Quarterly Routine Meeting of the PBOC Monetary Policy was being broadcast live globally via video network.

Seated at the head of the oval conference table, Zhou Chuan glanced at the notes in his hand and looked toward the other monetary committee members. "Over the past two years, we have lived through an economic crisis originating in the Euro-American West and spreading to over a hundred countries worldwide."

During the opening remarks of the meeting, the capital market gradually began to react.

The banking, insurance, finance, infrastructure, and automotive sectors crept upward, and market funds were already stirring restlessly.

"At the end of 2008, we put forward the 'Four-Trillion Investment Plan'. On March 18th, 18 railway projects were approved, with a total investment exceeding 500 billion."

The moment these words were spoken, the railway sector surged right out of the flatlands.

China Railway Construction Corporation and China Railway Group, the two leading stocks in the railway sector, saw their gains reach 3% in less than ten seconds, and they continued to climb.

Beyond the railway sector, steel stocks such as Baoshan Iron & Steel, Angang Steel, and Taiyuan Iron & Steel also exhibited conspicuous gains.

...

However, as the meeting progressed, Zhou Chuan and the other committee members never mentioned any new funding plans, focusing their discourse primarily on the "Four-Trillion Investment Plan" from late 2008.

On the other side of the stock forum, retail investors also began to buzz with discussion.

[Oranges are Red]: Could it be that there's no new investment plan? Why aren't they giving us some forward-looking info? I went all-in yesterday, and I'm freaking out right now!

[Second Brother from the Loser Pilgrimage Group]: Something feels off, it feels just a bit off. The MACD indicator for the banking sector has formed a top divergence!

[Qingyuan]: What feels off? I just went all-in on the railway sector.

[Love Drinking Little Cola]: What a coincidence, I also chased the highs in the railway sector. If there really aren't any new positive catalysts, I might end up hanging from the mountaintop.

Just as retail investors were trembling slightly, Li Daxiao, former chief economic analyst at Yingda Securities Research Institute and a renowned financial and economic analyst, posted a Weibo update.

[According to Governor Zhou, the "Four-Trillion Investment Plan" has only just begun; this is the infant bottom of our Chinese stock market. Even without a new investment plan, everyone shouldn't panic. I can already smell the faint fragrance of a baby bull market.]

Following the publication of the Weibo post, many retail investors gradually calmed their restless hearts.

Just as Li Daxiao had interpreted, the "Four-Trillion Investment Plan" had indeed only just begun, and there was no need whatsoever to adopt a so-called phased investment plan like Japan's.

Yet for the banking, insurance, and financial sectors, which had been hyped up for two days in advance and had risen by over 3.7%, this was undoubtedly a massive negative catalyst.

Before the meeting even concluded, the "Big Four" banks took the lead in a high-altitude swan dive.

Not only was their 1.2% gain completely wiped out, but they also plunged further below the water line.

The reason they had risen in the previous trading session and prior to the meeting was that market funds were gambling on the meeting bringing new favorable policies, positioning themselves in advance to drive the prices up. Since there was no new investment plan, this portion of the gains was equivalent to an overvaluation and would naturally be erased.

The flight of capital from the banking sector dragged the broader market downward, and the downward pull of the broader market in turn dragged down individual stocks in other sectors.

Far away at the library of Shanghai University of Finance and Economics, Zhang Yang—holding twelve thousand yuan in live-trading capital and waiting for an opportunity—watched the market slide downward and realized his opportunity was about to arrive.

At the same time, in the lower left corner of his laptop screen, a Sina Finance pop-up notification appeared.

[The Shanghai Composite Index has turned from gains to losses, after previously rising as much as 0.94%. The Shenzhen Component Index has wiped out most of its gains, currently reporting at 9,094 points up 0.94%, a gain of 0.04%, with both Shanghai and Shenzhen stock index futures experiencing a pullback.]