Chapter 271 The Beginning of the Game

With the booming real estate market in Hong Kong, residential prices have increased by 55% throughout the year, which is already reaching an insane level.

Residential buildings are most closely related to people’s livelihood and therefore cause the greatest public resentment and indignation.

Real estate developers develop building units, part of which is available for internal subscription and part of which is available for public sale.

Those who can enjoy the "privilege" of internal subscription are people within the group and people and institutions that have relationships with the developer.

The pre-sale and existing properties they subscribe to are usually not purchased for their own use but are put on the market at a premium.

Real home buyers often cannot even buy second-hand properties, but instead buy third- or fourth-hand properties.

The prices are constantly increasing, leaving homebuyers to sigh in despair. The pre-sale and ready-made properties are also not within the reach of serious homebuyers.

When the speculation is at its peak, you have to wait in line for days and nights.

The queues are basically monopolized by scalpers. If homebuyers want to obtain the right to buy a house, they must buy a number from the scalpers, and a number usually costs 20,000 to 30,000 Hong Kong dollars.

There are risks in speculating in real estate, but if you have an accurate view of the property market and act decisively, you can make huge profits, and sometimes even make profits without investing any money.

Real estate developers welcome speculation for many reasons: speculation is directly related to the property market. When the property market is booming, speculators will flood the market. Otherwise, non-buyers will be everywhere.
Speculators can share some of the risks of real estate developers, just as dealers share the risks of manufacturers;
Speculation can fuel the booming property market, which is called "speculation-driven market".

Therefore, some people regard real estate developers and speculators as a pair of twin brothers.

What's worse, some people regard them as the "culprits" of high housing prices.

Entering the 90s, calls to curb housing prices and crack down on property speculation became increasingly loud.

The Hong Kong government, which pursues a free economy, can no longer sit idly by.

On November 1991, 11, the newly appointed Financial Secretary, Sir John McCall, announced that he would increase stamp duty on building transfers and limit the proportion of internal subscriptions in order to combat speculation and curb rising housing prices.

According to market rumors, McGrath claimed that he wanted to fight tigers, not rats like scalpers.

Who is the tiger?
Real estate tycoons such as Liu Zhicheng, Guo Binsheng, and Cheng Yutong are all tigers.

Wednesday, September 11th.

Huang Tingfang came to Liu Zhicheng's office and said, "Mr. Liu, what do you think of the Hong Kong government's move?"

Liu Zhicheng didn't want to get involved in this kind of thing. Huangpu Group was gradually developing in an integrated manner.

What's more, he knew that the Hong Kong government's move was still full of loopholes and was vulnerable to powerful real estate developers.

However, as a real estate developer, he has to stand on the same side as everyone else, otherwise he will become a public enemy.

It is right to say that I have no regrets!

"Mr. Huang, I naturally think that the Hong Kong government's move has affected the free market economy and is not conducive to the development of Hong Kong!"

Huang Tingfang immediately said: "In this case, you are the largest real estate developer in Hong Kong, why don't you organize everyone to discuss it?"

Thinking of yourself as a tiger, this is overestimating yourself!
Liu Zhicheng immediately smiled bitterly and said, "You have to do this. I will definitely respond."

Huang Tingfang smiled and said, "I just came here to test your attitude. I'll host a banquet at the Hilton Hotel this Friday. Let's meet and have a chat."

Liu Zhicheng nodded and said, "On time! Mr. Huang really likes to joke. With my qualifications, I dare to organize everyone to protest against the Hong Kong government. I am afraid I will be laughed at."

Huang Tingfang smiled like a Maitreya Buddha and said, "Everyone is worried that you are thinking too much, doing 'Hong Kong culture to revitalize Hong Kong', comics and beverages, and forgetting that you are the biggest real estate developer!"

Liu Zhicheng smiled and said, "How could you forget that you are a real estate developer? Only when real estate brings enough profits, Huangpu Group will be qualified for comprehensive development."

Huang Tingfang nodded, this brother understands it clearly!

Friday.

Liu Zhicheng arrived at the Hilton Hotel in Central and saw many reporters as soon as he got off the car. He immediately realized that these reporters might have been deliberately brought in by Huang Tingfang.

"Mr. Liu"

"Mr. Li"

Everyone greeted each other. Those attending the meeting today included: Huang Tingfang, Liu Zhicheng, Cheng Yutong, Lee Shau-kee, Ho Wang-sheng, Kwok Huonian, Kwok Ping-shing, Lo Ka-shui, Chan Chee-chung and others.

Together, these big real estate developers account for more than 70% of Hong Kong's real estate industry, and the economy they control accounts for 40% of Hong Kong (they also have other industries).

Lee Shau-kee, who rarely speaks out, was the first to speak out: "What are the consequences of the Hong Kong government's brutal intervention in the real estate market? A large number of homebuyers will suffer the most, and it will cause social unrest!"

Liu Zhicheng also said the same thing. When the "85000 Public Housing Plan" was implemented in , it happened to encounter the Asian financial crisis and was criticized by many people.

The reason is actually very simple. There are too many property owners in Hong Kong. Everyone thinks that the house they bought with great effort has depreciated greatly because of your interference. Who will compensate for this loss?
Therefore, some extreme people naturally did a lot of extreme things!

Then, the "cannon" Cheng Yu-tung bombarded the Hong Kong government's "retrograde actions".

"If the Hong Kong government is willing to consider the public, the fundamental solution should be to increase land supply and build more public housing."

"The Hong Kong government reserved a large amount of government land for auction during the peak of the real estate boom. They received a large amount of fiscal revenue, but they want to beat us real estate developers to death!"

Everyone agreed!

Guo Binsheng added: "Since the Hong Kong government has asked the banks to send us a letter stating that the mortgage can only be 70%. Then we are not afraid of them. Each of our companies has a finance company and can still provide mortgages of 80% to 90%. "

This is the real estate developers' trick. All the large real estate developers in Hong Kong own a financial company that can provide mortgages to home buyers. Moreover, their financial strength is no worse than that of ordinary small and medium-sized banks.

In this case, there are only two parties that will be unlucky: banks and small and medium-sized real estate developers.

Thirty to forty percent of a bank's profits come from real estate. If real estate developers do their work, the bank's income will be much less.

If small and medium-sized real estate developers cannot provide mortgages, then they will not be able to sell their houses, and they do not have much ability to develop real estate.

Now that the sales are monopolized by big real estate developers, it will be even worse.

Everyone agreed with Guo Binsheng!

These real estate developers are smarter than each other, and there is no chance that the Hong Kong government and banks will really defeat them.

Everyone looked at Liu Zhicheng, meaning that it was time for him to express his stance, because he was the first one the Hong Kong government wanted to punish.

Liu Zhicheng said calmly: "Don't worry, Xiangjiang Real Estate is not that fragile. Of course, as a junior, I will follow in your footsteps!"

Everyone still thinks Liu Zhicheng is straightforward!
In particular, everyone was happy to hear that Liu Zhicheng, who has the greatest vision in Hong Kong, said that Hong Kong real estate still has great prospects.

Since the gathering was considered a "deliberate leak", the news that the real estate developers had joined forces to "go against" the Hong Kong government was prominently published in newspapers the next morning.

The news that real estate developers had joined forces to "go against" the Hong Kong government was prominently published in newspapers the next morning.

As the Financial Secretary, McGrath was naturally informed of this by his assistant and he became furious.

McGrug was an old official in the colonial territories. He was hired as an Administrative Officer in the Administrative Service of the Hong Kong Government in 1966. At that time, he was only 26 years old and had just graduated from Birmingham Business School with a bachelor's degree in philosophy four years ago.

He has served successively as Assistant Chief Secretary, Assistant Financial Secretary, Director General of Trade, Secretary for Commerce and Industry (not one of the three secretaries), and Deputy Financial Secretary.

He did not expect that he would encounter such a difficult problem as the new Financial Secretary.

Of course, as an official who has served in Hong Kong for a long time, McGrath is well aware of the strength of Hong Kong's real estate developers. If it were not for the strong public opinion, he would not want to make a big fuss about real estate.

As the Financial Secretary, he is of course very concerned about fiscal revenue, and he is indeed worried about the threat posed by real estate developers - investing overseas.

However, he must now move back to the city, otherwise he, the newly appointed Financial Secretary, will have no authority and become a laughing stock among the citizens.

Go to war directly with real estate developers?
This is obviously impossible. Others have not violated any laws. Even if they have, the Hong Kong government does not dare to openly suppress all real estate developers.

Soon, he said to his assistant, "Invite HSBC boss Prudential and Hang Seng Bank chairman Lee Kuo-wai to come to my office and tell them I have something urgent to discuss!"

"Okay, Chief!"

About an hour later, Pu Weishi and Li Guowei came to the Financial Secretary. HSBC is the "quasi-central bank" of Hong Kong.

Now he is the rotating chairman of the Hong Kong Bankers Association. Hang Seng Bank is a subsidiary of HSBC, and the Financial Secretary is the immediate superior of HSBC, so the relationship between the three can be known. McGrath said: "Did you see the news this morning?"

Pu Weishi nodded and said, "Such a big thing, I was also told by my assistant, I find it a little unbelievable. The real estate market has risen so much this year, but they are still not satisfied!"

Li Guowei also echoed: "They deliberately used the name of entertaining Canadian officials to target the current 'crackdown on speculation' policy.

They even revealed that they were planning to use their own financial company to provide high-value mortgages, which clearly targets the banks as well!"

Hang Seng Bank is no longer the Hang Seng Bank of the past. When a bank run occurred in the 1960s, it was the negotiations between Lee Quo-wei and HSBC. From then on, Lee Quo-wei truly became a member of HSBC.

At the beginning, the veterans of Hang Seng Bank and HSBC got along peacefully. Although HSBC acquired 51% of the shares, it only sent four directors and did not interfere too much in the operation of Hang Seng Bank.

However, as time went on, the Hang Seng veterans discovered that HSBC first listed Hang Seng Bank in the 61s, and then aggressively acquired shares in the stock market, expanding its equity to %. As a result, the influence of the Hang Seng veterans weakened.

This is indeed the case. HSBC is very wary of Hang Seng's veterans and has been taking a series of measures, including strengthening its controlling stake and supporting Lee Quo-wei.

In the end, the Hang Seng veterans completely lost control of Hang Seng Bank.

McGrath nodded and said, "How do you think we should fight back against them?"

Pu Weishi and Li Guowei fell into deep thought. In this battle without the smoke of gunpowder, the strength of that group of real estate developers was extremely powerful and they were extremely united.

Seeing that the two were silent, McGowle immediately said, "What do you think of bringing Liu Zhicheng over? I believe he will also weigh the pros and cons!"

"This move is not impossible. It will immediately disintegrate the real estate developers' alliance!"

McGrath nodded and said, “Also, I hope you can advise all real estate developers not to go against the Hong Kong government.

If they insist on doing this, their other real estate plans will not be supported by the bank!"

Pu Weishi and Li Guowei were shocked. McGrath was using the entire banking industry to start a war with the real estate developers!

However, as a quasi-central bank, HSBC could not possibly not agree or support McGrath;
Because HSBC is a 'quasi-central bank', its pace must be consistent with that of the Financial Secretary.

"Okay, Chief!"

But when Liu Zhicheng was warned by Pu Weishi on the phone, he immediately wanted to retort - It would be fine if you don't threaten me, but if you really threaten me, HSBC is useless!
He is not like other real estate developers who need bank support. He has his own bank. Plus, he can earn a lot of cash in finance, so he can lend the bank's money to his own company.

But then he thought, he might not be afraid of banks, but other real estate developers must be!

They will definitely bow their heads, so why should I bear it alone?
Moreover, if the news were to report this, he would be the only one to face the Financial Secretary, and his hard-earned "good reputation" would be ruined.

So, after hanging up the phone, Liu Zhicheng immediately communicated with Li Chaoren and others.

Sure enough, everyone sighed and said that they didn’t want to make too much trouble with the bank. They also said that they were not like Liu Zhicheng who ran a bank, which meant that they should just compromise!

In this case, Liu Zhicheng suggested that everyone hold a joint press conference to announce the real estate developer's decision.

Everyone agreed!

The next day.

Large real estate companies such as Cheung Kong, Whampoa Group, New World Development, Sun Hung Kai Properties and Henderson Land Development jointly held a press conference, stating that they would accept 70% of the banks' mortgage decisions and had no intention of going against the banks.

Real estate developers may not be afraid of the government, but they are definitely afraid of banks.

Without bank support, no financially strong real estate group can operate normally.

HSBC is the rotating chairman bank of the Hong Kong Association of Banks and its status is like that of the government's central bank.

He who knows the current affairs is a hero!

Of course, this is just an apparent compromise, meant to save face for the newly appointed Financial Secretary and the bank.

Actually?

First, the Hong Kong government may not be able to be strict in its implementation;

Secondly, this time only HSBC and Hang Seng Bank made statements. In fact, most banks are willing to respond to the requests of real estate developers.

Therefore, it is only natural that real estate developers subsequently colluded with some banks to arbitrarily increase mortgages.

Finally, real estate developers generally believe that regulations are too strict and are not conducive to the development of the property market.

This matter has come to an end, but the turmoil in Hong Kong's property market has just begun!
When people discovered that housing prices in Hong Kong were not only not suppressed but continued to soar, that was the second round of "war"!

By then, the citizens will not be complaining about the real estate developers, but the beneficiary groups including the Hong Kong government.

Wait and see!

This incident gave Liu Zhicheng a reminder that Huangpu Group must speed up its integrated development!
The next public outrage will definitely not be so small!

Moreover, as the largest real estate developer by then, I will be the only choice!
So he may be the object of the citizens' greatest anger!

"Hong Kong's prosperity through port flow" and "Huangpu Group's integration" are Liu Zhicheng's response plans.

April 11nd, Monday.

At the core high-level meeting of Huangpu Group, Liu Zhicheng said: "From now on, the purchase of land reserves will be reduced by 40%.
We will give priority to land and old buildings in Hong Kong, Kowloon, Shatin and Tsuen Wan, and consider comprehensive investment issues! "

In the first ten months of this year, Whampoa Group purchased nearly HK$4 million of land reserves almost every month, which has now reached 3000 million square meters, and there are 1800 million square meters of farmland.

The purchase of nearly 4 million yuan of land reserves every month is equivalent to spending almost all of the profits from the development of the site and the funds recovered from the land/construction costs.

At present, Whampoa Group has about 50 billion Hong Kong dollars in cash and 80 billion Hong Kong dollars in debt.

When the senior executives heard this, they also knew that the sensational "Hong Kong government, banks, and real estate developers" incident had touched their boss - he didn't want to be the first to be exposed.

Hao Qingwen said: "Okay, but our land is still better than Sun Hung Kai's in terms of location and quality!"

Liu Zhicheng said: "In this case, let's set the tone! Moreover, we are now investing in a large number of large projects - Tsuen Wan large projects, commercial building reconstruction plans, which also require a lot of funds.

The company must also ensure sufficient cash flow in its account and be ready to make large investments overseas and in the mainland at any time.

Hong Kong is too small to accommodate our Whampoa Group."

Everyone couldn't help but be surprised. This was contrary to the boss's usual strategy of 'investing only in Hong Kong'. Could it be that the boss cared about his reputation and chose to reduce investment in Hong Kong?

Seeing everyone's doubts, Liu Zhicheng smiled and said: "Of course, the main investment is in Hong Kong, and it cannot be less than 60%!"

Everyone nodded.

Then, Liu Zhicheng continued: "Expand the talent scale of Huangpu Group (Huaxia) three times for me, and be ready to expand to the mainland at any time!"

In fact, everyone has become accustomed to Liu Zhicheng's ability to foresee things. No other boss in Hong Kong can make predictions as early and accurately as he does.

The boss said this today, he must have heard some news when he went to the mainland in October.

Hao Qingwen said seriously: "Okay, I know what to do!"

He had followed his boss to the mainland for inspection and had heard some of his boss's plans, so it was not surprising.

Finally, Liu Zhicheng concluded: "Don't worry, the Hong Kong government's crackdown on real estate this time will not be very effective, and Hong Kong's real estate is still full of momentum.

Next year, we will still have huge cash flow. Therefore, we should use our passion to operate each business seriously.

When the time is right, the entire group will unleash amazing power.”

Just to give everyone some encouragement so that they don’t think that the Hong Kong government and banks have won this time.

"Yes, boss!"

Everyone is really excited. Next year, Whampoa Group will reap greater rewards, with more office buildings joining in, and its status in Hong Kong is evident.

The Hong Kong government thought that this confrontation had come to an end, but in fact it was just the beginning of a game.

(End of this chapter)