Huaxing Capital founder Baofan: Shorting is the capital market game

Shorting is a game of capital markets. When your share price is overvalued, you need to realize that you are in danger of being short. Don't be willing to sell stocks. It is best not to pledge the stock, especially when the stock price is high. There should be a window or media platform for investors in the United States. Oral Baofan (founder and CEO of Huaxing Capital) collated our correspondent Liu Jianqiang so many Chinese concept stocks were shorted, and I think the biggest background is that international capital is doing air China. Why do you do air kingdom? Because China's economy is facing great challenges, we are facing a structural rather than a cyclical crisis. If there is not a real negative thing, there is no truth, just by rumor is not empty. The short person is so, the actual you should reduce 10 points, it frighten others to say to reduce 50 points, this is the same as the bubble, you but good 10 points, it said 50 points.　　Capital markets are always swinging like this. So how can you make the most money shorting China? It must be the largest and most liquid-selling company in China, and that is the Chinese financial sector and the Hang Seng index. However, these two things are elephants, do not move, short of the people compared to a little dog, can't bite the elephant. How to carry the elephant down? You must unite all the forces, then you need others to believe you.　　As long as all the people start to panic, you bite the first, others will start to help you bite. How do you get people to believe you? You must first find a few soft tomato. In the U.S. borrowing shell listed Chinese companies, the proportion of rotten companies is quite large, a dozen a quasi, this is citron, Muddy Waters before the years to do. Markets are slowly noticing that they have a point. Then a few bigger ones, such as the southeast, do have a problem. Next to the new Oriental, the audience such, at most a little problem, but unfortunately, at this time, there are many people began to believe. The next step is financial stocks and the Hang Seng index. The Hang Seng index is now back at 20,000, and the space to go down is great.　　For the short sellers, these stocks, which are now being shorted, are only small dishes, and shorting them will not earn much money. The whole wave of shorting is driven by a group of big international hedge funds. Citron and Muddy Waters are just the horns in front of them, because hedge funds can't jump out on their own. At its core, many of the companies that have been shorted, the hedge funds that are their former shareholders, know that the company is flawed and are now shorting to make a profit. There are always some people say that flies do not bite seamless eggs, are nonsense, they do not know that behind this is a large industrial chain in operation. Also do not criticize short from the moral angle, the family is to make money. But you know, it is to make money, and there is no lofty purpose. To be a state of the air, with "conspiracy" two words I feel a bit over, but definitely a big game.　　Their idea is that after the bank shares and the Hang Seng index are put through, the Chinese government will eventually bail out and they'll do more on the backhand. This is a game. Capital of the game. Chinese entrepreneurs have an erroneous zone and feel that a goodEntrepreneurs should not mix with capital. You are not listed, on the city must know how to play the game, do not understand the rules of the game will be slaughtered. There is no justice or evil in this, nor do I believe in any conspiracy against China. Only the Chinese do not understand, good bullying. I went to Morgan Stanley in 1994 years and grew up in this circle, so I know all about it.　　If China's financial system does not reform, it will not produce a group of financial elites, no one will help you deal with these people. Short companies are generally overvalued and have squeezed space. Short sellers often have demons in your company to help collect your information. If a short person thinks the information is valid, it will decide to short you. In general, they will give some materials to the companies such as muddy water, let them write analysis report, and then send the report to some fund companies to encourage more people to build empty warehouses. When the time is right, they will let the research company officially release the report, while they collectively smash in the two tier market. This is bound to cause panic when the selling is raging. Stock prices fell to a certain price, accept the stock pledge of the banks and other institutions will be cut, the share price fell.　　Fall to the ideal price, the short person comes in to fill in the warehouse, the borrowed stock is also lost, a short round is over. So how do you prevent companies from being shorted? When your share price is overvalued, you need to realize that you are in danger of being short. Do not take stock of the company as collateral, especially when the stock price is high. A short person needs to borrow a lot of stock to smash a plate. China has a lot of entrepreneurs, the company after the listing, always feel that their share price is undervalued, unwilling to sell shares, like to pledge shares borrow money to do other projects.　　This creates opportunities for short sellers, who can easily borrow the stocks they need to sell short. Once the company is short, you are in fact a PR battle, so there should be an investor-oriented window or media platform in the United States, to be able to timely release positive news to investors. Of course, the most bull is to find the so-called "white knight", a big fund to buy your stock, let the stock price rise. Or, simply retire the city and leave the game. The retreat will make the share price go down, and the shorting may be in vain.　　There should be such preparation. This is the normal game process, you come to me. Don't be angry or try to change the rules of the game. As a Chinese entrepreneur, you must understand this. Do business people come to the capital market, often a pair of looks like the capital is very disdain, do not do so.