The Global Financial Crisis is back again in 2018! Another Era (再创世纪) is currently being broadcasted. This is an amazing show which draws invaluable lessons from the Global Financial Crisis in 2008 but of course with elements of drama added into it. Also, I find it closely resembling the various office politics in real life and is able to draw parallel to it.
The great Roger Kwok (郭晋安) plays a resourceful man who was only a low level salaried staff and how he rose up to riches. Roger is some of those folks out there that you will meet in life who does not see anything right or wrong with how he made his money. Whatever the means, as long as it helps him in his quest to become rich, his principle values do not have the values of good or bad that bounds many other people. In business, he justified the scheming plots and working with other cunning old foxes as exchanging of what each other needs as a fair deal. Also, in the stock market, if there are winners who made it big, there will also be losers who ruined themselves financially.
Danger of over leveraging and economic outlook is all about consumer confidence.
Roger basically brought down the wealthiest Fang family in Hong Kong by bribing a personal lawyer who keep encouraging the 富二代 CEO to load up on mini bonds while his father,the capable Group Chairman was being hospitalized. When the US government came out to bail out some of the financial and insurance companies as well as Fannie Mae and Freddie Mac, there was a mini stock rally. The corrupted family lawyer managed to get the stupid CEO to take out huge loans using his family shares of the Fang family listed business as collateral to buy more mini bonds and stocks by persuading him that the crisis is over and stock prices will shoot up and it’s time to make more money. When the US government decided to let Lehman Brother collapse without rescuing it, the global stock prices continued to free fall. With the value of the collateral of Fang listed shares dropping and the CEO not having enough cash to top up the collateral, the lending bank sold off all the Fang listed shares. The abundance of Fang shares dumped into the market lead to a share price collapse from HK$100 to HK$25 while allowing Roger Kwok to jump in and accumulate the Fang family business at a super cheap price. Damn smart unscrupulous guy!
The moral of the story here is one can never know how bad the financial crisis will become. The 2008 Global Financial Crisis was considered mild relative to the 1930s Great Depression. If one is forced to liquidate during such market downturn and do not have sufficient resources to prevent a force selling of one’s own stock purchases, one will suffer tremendous realized losses. This is the danger of over leveraging on loans or margin financing. The world was lucky that Ben Bernanke, a student of the Great Depression and belief in staunch government intervention managed to prevent the crisis from worsening.
Complex financial products such as sub-prime mini-bonds is not for all retail investors.
In “Another Era”, the series antagonist Roger Kwok approached the “good guy” Frankie Lam (林文龙) to offer him a job at his new Company. Roger greatly admired Frankie for his wits in advising the then 2nd richest man in Hong Kong on how to rescue the Hong Kong Stock Exchange by engineering a series of financial moves to restore confidences back in companies, institutional investors and also retail investors. However, Frankie replied that he will never align himself with such an unscrupulous man like Roger. The next shocking thing that Roger responded was that the Minibonds product were designed by Frankie himself so as a matter of fact, Frankie himself is no saint as retail investors lost more than HKD$20 billion due to this sub-prime creature.
Frankie lamented that the mini-bond was supposed to be for corporate companies and the greedy banks repackaged them and sold them to the man on the street without highlight on the complex underlying securities risk on this product.
The lesson here is never to purchase a financial product that you do not understand. Do not follow the herd instinct. Buying something without adequately understanding it and succumbing to thoughts on easy money will make one vulnerable to total loss of investment.
The “Another Era” is an awesome show starring many prominent Hong Kong Stars and highly recommended. It is cleverly written and depicts the financial market as well as the greed of man accurately. A must watch for all retail investors!