October 20, 2024
Setting Up For Success in Hong Kong
Development #1 Resolved
Imagine a world if Hong Kong didn't exist. The world may as well not exist. Hong Kong serves that crucial role for keeping the global economy on good footing with trade links between China and the US. It's also no surprise that any business trips to Hong Kong almost always end up being pivotal and life changing.
What people don't like to admit is that China's economy and the very survival of the CCP depends on Hong Kong as the bridge between the mainland RMB economy and the rest of the world trading with other currencies mainly backed by the USD. They do this while presenting a juche-like narrative to their own people about the Chinese economy to boost nationalistic fervor and portray America as the enemy. (Side note: juche is a term used in North Korea to describe their isolationist approach to the world)
For that reason I am fairly optimistic that Hong Kong will remain as an economically free powerhouse for years to come despite very real concerns about Beijing's meddling. All this has done is to increase the anger towards Xi Jinping for which now the vast majority of people in Hong Kong truly hate his guts.
At the same time, more and more businesses are pulling out of Hong Kong because the geopolitical uncertainty is very real. This was the main reason for the trip, I had to make an appointment to apply for a new brokerage account with a different company as my current one made the decision to pull out.
This time I also brought my wife along for the trip as I wanted to help her open a regular bank account in Hong Kong and start the process to get her hard-earned money out of China. This trip was an eye-opening moment for her also. She was finally starting to come around and realize that her RMB sitting in the mainland was doing absolutely nothing for her. These so-called stimulus measures that the Chinese government is doing now are nothing more than a hail mary designed to save their sinking ship. It is a quick fix that might boost the stocks temporarily but doesn't solve any root problems.
After landing at the airport with nothing more than a small bag, we checked into a nice hotel in Central. Both of us couldn't believe how packed everything is together in Hong Kong yet that is part of the marvel. We enjoyed some healthy food and for some reason a sleepless night.
The next day we walked nearby to the main bank with my "personal relationship manager" and tackled the first two errands. First was to transfer all my Hong Kong stocks to his bank, but that was just simple paperwork. It was more of a ruse for the real reason: help my wife open an account. Unfortunately there wasn't much he could do as they are booked solid with literally thousands of mainland people who are doing the same thing. He only specializes in high volume accounts for rich people, but he gave some great advice. He said, "Just visit the neighboring branch, wait in the queue, and ask to open an normal account. Make sure you tell them it is for investment purposes." We thanked him and then filed that advice in memory.
Next was most interesting, as I told him my other brokerage was pulling out of Hong Kong and moving to Singapore. He went into a speech that was absolutely correct about the mainland. He said, "This has happened to many of my colleagues. The reason is all because of politics. As you know we can speak freely here, there are no cameras watching nor people monitoring our social media. All of this boils down to one man and you know who he is. This man is not good for the Chinese people. There are rumors circulating out of Beijing that people within the CCP are silently rebelling against him and trying to force him to step down, but I see a coup as very unlikely. He is a dictator and cares only about himself. He has done more and more to consolidate his power in all aspects of his ministry. People all around him are dying for no reason, don't you think that's strange? I'm rather pessimistic about all this, if there is any coup it will be quite bloody."
I joked and said, "Well they can choose window or tea" He didn't get the reference, so I said this is what Vladimir Putin does to those who try and cross him: push them out of a window or they drink poison tea. Xi is no different.
Well that was rather enlightening to say the least. We then carried on with the rest of our day which was running around from one bank to another and trying to help my wife open an account. This had echoes of my last trip when I did the same for my best friend at work. In the end we succeeded this time, just as with him. She was beyond elated to get this account and said she'll do anything to repay for my help. I said, "It doesn't matter, I do this for you, let's just enjoy some wicked street food near Central and you can buy me some fried rice and a beer." Truth be told, Hong Kong street food is legendary. Ultimately this really helped our relationship. Once I heard the sound of that wok on the street with sizzling fried rice it was like I was in heaven.
Next up was a visit to my new brokerage account. They set up all the paperwork and the client manager was absolutely marvelous. They had a nice quiet office high up in some tower in the middle of Central. It was peaceful and serene, all topped off by that delicious capuccino as I drank and he answered all my questions. I was mainly interested if there were restrictions on shorting stock and option positions and what the margin collateral requirements were. The good news is few if any restrictions, and it wouldn't surprise anyone that the more cash and stock shares you can shovel into the account, the more margin collateral they'll give you. This was all moving in the right direction. The manager was impressed with my knowledge and said, "I can see that you are a successful options trader and you know what you're doing. We will answer the questions on this form accordingly and give you the most margin we can."
Later on I tried to catch up on much needed sleep. Part of the reason for the sleepless night on Thursday was because I fabricated a story for my new boss at my full-time job (of which I will now 100% quit) in order to get a day off. Normally in the past you would just say to reasonable bosses well in advance, "I need a day off to do some personal business in Hong Kong, can you help arrange it?" but not with this new guy. So that's essentially what I lost sleep over, but is really needless.
As a way of the universe proving this to me, while my wife and I had finished that amazing street food and began to enjoy whisky cokes at Lan Kwai Fong (the famous Bar Street) I finalized a trade on a Netflix option. To make a long story short, Netflix killed their earnings and the stock soared. I had short sold a naked put option earlier which was ultra high-risk (proably also explains why I didn't sleep the night before). But the next day when the market opened around 10pm at night I then closed the position and made nearly $4000 profit. That is almost an entire month's salary at my teaching job. Obviously nobody is saying these big wins are sustainable, but if I can keep on supplementing my work with trading then who needs slave driver bosses treating people with no respect.
Later that night it was more success as we went to the IFC mall for my wife to buy a new Iphone. As we stood there marveling at the stock exchange and just soaking in this atmosphere on a Friday night, we then saw another outdoor bar right outside the trading headquarters. There must have been dozens of traders who had been working all day and now celebrating with drinks. Many more I'm sure were working late because the US market was also starting their trading day, as I had just seen from my massive payoff. Who knows how these traders here in Hong Kong would keep on partying later. This was the Hong Kong I knew and loved. You could smell the freedom in the air.
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My wife managed to successfully get her new phone and also with proper VPN connections to use in the mainland with no hassles anymore. This took an enormous amount of work and creativity to set everything up, but the people at the Apple Store as well as the nearby cell phone shop were familiar with what to do. As with the banks, the cell phone shops also see a massive number of mainland Chinese doing the exact same kind of things to try and circumvent all the restrictions.
The next day she had to continue setting up her business while I then did a fitness class right in the heart of Central and that basically knocked me out. All told an incredibly successful trip.
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