leonardwarren Chapter 8 Finalizing the Financing
Chapter 8 Finalizing the Financing
Following Lao Zhou up to the second floor, we pushed open a heavy wooden door, and the noise downstairs seemed to be muted instantly. A cool breeze, carrying a faint scent of tobacco and tea, enveloped us.
The view from the VIP room was completely different from that downstairs.
The light here is bright and soft, and the carpet is clean. The space is cleverly divided into several areas, unlike the layout of one room per household that Lingyun imagined in later generations.
Several large mahogany coffee tables and genuine leather sofas were scattered around, with a few people sitting on the sofas, most of them dressed well and aged in their thirties or forties.
They chatted quietly or sipped tea alone, their demeanor much more composed than the anxious stock market investors downstairs. Each person had an individual computer monitor, its screen displaying green numbers and curves—a real-time synchronization of information from the large screen downstairs, yet clearer and more private.
Several extension telephones stood in the corner, clearly "hotlines" used to issue instructions directly to the trading counters downstairs.
"Manager Zhou."
"Old Zhou, you're here."
Upon seeing Old Zhou enter, someone nodded in greeting, their gaze then falling upon Ling Yun beside him, carrying a hint of scrutiny and curiosity. The presence of such a youthful-looking person here was rather conspicuous.
Old Zhou smiled and nodded in response, leading Ling Yun to a sofa by the window. "Sit down, it has a good view and is quiet."
Ling Yun sat down, enjoying the softness and support of the leather sofa. On the coffee table in front of him, besides an ashtray and a teacup, there was a handwritten notebook and several pens of different colors, clearly used to record market trends and insights.
This environment and treatment are truly incomparable to the crowded conditions downstairs where you have to crane your neck to see a big screen. Here, transactions are more like well-planned decisions than the frantic buying of a vegetable market.
"How are you feeling?" Old Zhou sat down opposite him and handed him a "Hongtashan" cigarette.
Ling Yun waved his hand to politely decline, "Thank you, no, it's a nice environment, very quiet indeed." His gaze swept across the entire room, taking in all the subtle scrutinizing glances, yet he remained calm and composed.
"Hehe, everyone here is a friend, and they're all people of some standing," Old Zhou said meaningfully, then changed the subject, "So, let's get down to business? What are your thoughts on the leveraged financing?"
Ling Yun didn't answer immediately. Instead, he picked up the hot tea that a staff member had just brought him, took a sip, and then slowly said, "Manager Zhou, I understand the 1:5 leverage. But I need to look at the agreement first, especially the specific terms regarding the liquidation line and interest payments."
Calm, cautious, and getting straight to the point. Old Zhou's opinion of Ling Yun rose even higher. He said no more, took out a pre-prepared contract of about seven or eight pages from his briefcase, and handed it over.
"This is our standard margin trading agreement template. All the terms are in there, clearly written down."
Ling Yun took the contract. The paper was slightly rough, and the font was the kind of needle-type font used on old-fashioned printers. He lowered his head and began to read it intently. Old Zhou didn't urge him. He lit a cigarette and slowly smoked it, but his gaze never left Ling Yun's face, trying to read some emotional changes from it.
The content of the agreement is not complicated, but the core terms are very clear:
Financing Amount and Leverage: Party A (the funding party, i.e., the capital provider associated with the business department) provides financing at a ratio of 1:5 based on Party B's (Lingyun's) own funds of 27 yuan, which is 135 million yuan. Party B's total trading account funds reach 162 million yuan.
Use of Funds and Account Supervision: Funds will be used solely for trading A-shares on the Shanghai and Shenzhen stock exchanges at the designated brokerage. The trading account will be jointly managed by Party A and Party B, with Party B responsible for operation and Party A responsible for monitoring.
Interest and Fees: The monthly interest rate for the leveraged funds is 3.5%, calculated based on the actual number of days used. Interest for the previous month must be paid by the 5th of each month. For overdue payments, Party A has the right to deduct the interest directly from the trading account margin.
Risk control and liquidation line (most critical clause): The agreement clearly stipulates that when the total assets of Party B's trading account (stock market value + cash) are lower than 105% of the leveraged capital (135 million), i.e., 141.75 million, Party A has the right to force liquidation until the cash in the account after selling the stocks is sufficient to cover Party A's principal and accrued interest.
Seeing this, Ling Yun silently calculated in his mind: his liquidation line was set at 141.75 million, meaning his loss margin could not exceed 12.5%. Even a slight, significant market correction could trigger liquidation, resulting in the loss of everything.
High risk, high reward. He clearly knew that Shenzhen Technology was about to experience a near-vertical surge. As long as he bought in with all his funds on the right side, and didn't go all in at the beginning, the volatility risk would be completely controllable.
Seeing Ling Yun close the agreement, Old Zhou stubbed out his cigarette: "Have you read all the terms carefully? Do you have any questions?"
"The terms are very clear." Ling Yun gently placed the agreement back on the coffee table, looking calmly at Lao Zhou. "Monthly interest rate: 3.5%, liquidation line: 105%. I have no objections."
A glint of light flashed in Old Zhou's eyes: "Great! Shall we sign now?"
"Okay." Ling Yun nodded without hesitation.
Old Zhou immediately took out a pen and inkpad from his briefcase. Ling Yun took the pen, solemnly signed his name in the designated area for Party B, and then pressed his red fingerprint. Old Zhou, representing Party A, also completed the signing. Two copies were made, one for each party.
The moment Ling Yun put down his pen, he felt his heart skip a beat. This thin agreement had firmly bound him to this branch, to Lao Zhou, and to a capital of 162 million. A true capital adventure had begun.
Old Zhou put away his copy of the agreement, his smile becoming exceptionally sincere and warm. He extended his hand proactively: "Brother Ling, it's a pleasure doing business with you! From now on, you are one of our most valued clients. The funds will be transferred to your escrow account within ten minutes. Wishing you great success!"
"Thank you for your kind words, Manager Zhou." Ling Yun grasped Old Zhou's hand with a steady grip.
"Still calling me Manager Zhou? That's too formal!" Old Zhou feigned displeasure. "Just call me Old Zhou! If you need anything in the future, like market information or trading channels, just come to me. This VIP room, this spot, is yours!"
Ling Yun readily agreed: "Okay, thank you, Brother Zhou. Please take care of me in the future."