Chapter 1095 - A bubble had formed in China
Chapter 1095 – A bubble had formed in China
Feng Yu discovered that once he became famous, whatever he does will appear on the headlines. He had tried to keep a low profile recently, but after LA Wind and Rain won the NBA championship, Feng Yu’s name appeared on the headlines again.
Feng Yu is also helpless about this. His team had played well, and it should be the Coach, team manager, and players’ credit.
Feng Yu does not want to appear on the headlines at all.
Some sports media even want to interview Feng Yu. They want to know if Feng Yu has the intention to buy other teams, like the football team, female basketball team, baseball team, etc.
But Feng Yu rejected all interviews. He had bought this basketball team for fun and is not looking at making profits from it. As for other teams, he is not interested.
Feng Yu was relieved to have signed three years of endorsement contracts with his players before winning the championship. If not, the endorsement fees will be several times higher.
For example, Pierce had become this year’s MPV. His finals’ performance had impressed everyone, and Carter, who had lost this year’s MPV to Pierce, was also worth much more.
Feng Yu had won 1.2 million USD from his bet, and he used his winnings as a reward for his team.
After winning the championship this year, the broadcasting rights sales will be higher next year. Some TV stations had bought the broadcasting rights for the next three years, and the team’s jersey, tickets, arena’s advertisements, etc. had increased a lot.
Elgin promised Feng Yu that the team will be profitable from next year onwards. Actually, the team had become profitable after they entered the playoffs. No one expects a bottom team to become profitable within two years.
Feng Yu is not concerned about all these. Even if the team is not giving him any returns, he had not made any losses for this investment as the team’s value had increased by a lot.
Kirilenko is thinking of setting up a Russian basketball team in the NBA, and Feng Yu also wants to try setting up a team full of Chinese players. Even if he cannot do that, he wants to send Chinese players over to train the NBA players.
The Chinese basketball team had been stationed in the US for training, and Feng Yu asked his scouts to look out for good players that suit his team.
The basketball league in China is not as established as the US. It’s hard for professional Chinese basketball players to make a living. Feng Yu’s decision to recruit Chinese players is well received by the players and the Chinese General Administration of Sport. At the same time, Feng Yu had indirectly helped Wen Dongjun in his career. He was promoted from the head of a small section to the head of a department.
A few days ago, Feng Yu had cleared his short position on Enron’s shares. Feng Yu, Kirilenko, and Fu Rongqi had made a few hundred million USD from this transaction. They had suffered some losses when they dumped Microsoft and other tech-related shares earlier. Still, the returns from Enron’s shares are much higher than the losses.
Citibank etc. were also sued by the courts because of their dealings with Enron.
During this period, Enron’s share prices had fallen below 5 USD. No one had expected this to happen.
Those who believed what Enron’s top executives said suffered massive losses. They did not expect Enron to have really fabricated their financial reports.
Enron’s share prices continue to plunge, and Enron’s top executives and directors were all sued. But all of them had transferred their assets away before they were caught.
Some of them had transferred their wealth to their parents, spouses, children, etc.
Because of Enron’s implication, Citibank’s share prices also fell. There were rumors that Citibank will have to compensate up to 2 billion USD!
But at this time, the stock market also started recovering. Some blue-chip companies start to pull up the market, but tech-related stocks continue to decline.
Especially Nasdaq. The majority of internet and tech-related stocks are listed on Nasdaq.
Nasdaq index had increased slightly before it starts fluctuating.
The stock markets entered a dormant period, and investors no longer invest in internet and tech-related stocks. At this time, AT&T announced massive losses.
This announcement speeds up the bursting of the internet bubble.
These few years, AT&T had been laying fiber optic cables to increase the internet transmission capacity by more than ten times.
But the demand had only increased by less than three times.
AT&T had issued shares to raise funds, and this increases their debts. However, its profit is not enough to cover their debts.
Some telecommunication companies were forced to be acquired, and some declared bankrupt.
There are about 10 million internet users currently in China, and this figure was so high due to the online game, Legend of Mir. When Sohu, Sina, NetEase, etc. companies got listed on Nasdaq, many companies noticed the internet’s potential!
Thus, people in China also started to invest in internet shares. They invested in internet companies blindly.
Feng Yu knew some internet companies’ share prices will shoot up after they got listed on China stock markets. Still, when he heard about those companies or the owners’ names, he realized he had not heard of them in his previous life.
The myth of becoming a millionaire through the internet is too enticing for investors.
Many Chinese internet companies start to poach employees with high salaries. They even managed to poach Microsoft staff from their China office. The salary offered was even higher than what Microsoft is paying them.
Some internet companies advertise aggressively on billboards, TV, etc. but no one knows what these companies are doing. These companies are only trying to increase their exposure to raise funds through the stock market.
These companies are flaunting their wealth to tell other investors that the company is rich. All investors will get high returns if they buy the company’s shares.
What if the company runs out of money? Issue more shares, and the company will have money to spend again.
This is a vicious cycle, and once this bubble burst, the investors will lose their money. To the company’s major shareholders, they don’t care as they can’t dump their shares anytime soon.
During this period, a lot of companies approached Tai Hua Consultancy for funding. But they were all rejected by Sun Lijie. Feng Yu had instructed them not to invest in these companies.
So, Sun Lijie rejected lots of people until a man named Li Yanhong appeared.
Translator’s notes:
Robin Li