Source: Brokerage China Author: Qu Hongyan Recently, China Yangtze Power hit a historical high and once again showed the slow bull stock trend of "tripling in ten years". The slow bull market has left behind many passers-by and brought good returns to the steadfast investors. It is "rare for those who triple in one year to be like carp jumping over the dragon gate, while those who double in three years are few and far between." On the other end of the investment world, however, violent collapses are also deafening, with many financial products suspected of "Ponzi schemes" ceasing payments, leaving investors with no hope of recovering their investments. Both positive and negative cases illustrate the importance of forming a suitable mentality towards money in one's lifetime; otherwise, sooner or later, you will divorce yourself from your money. "I call this the money mind, a person's IQ can reach 120, 140, or even higher levels, and perhaps some people's minds are good at doing one thing, while others are good at doing another. They can do things that most ordinary people can't do. But I know some very smart people who make very foolish decisions because they lack the money mind." Buffett once said so. The so-called money mind refers to believing in common sense, believing in compound interest, being cautious and rational, thinking independently, prioritizing security over return, not dealing with people with questionable character, not easily guaranteeing for others, not believing in windfall profits, and not trying to cross legal norms for extra benefits. In today's world of ubiquitous information, everyone's wealth may become the "prey" of those with ulterior motives. Only with the money mind, can one form good behavior habits and shield oneself from separating from one's wealth. Do not entrust your wealth easily. Wealth is easy to lose but hard to accumulate, and trust is a vital reason leading to the rapid loss of wealth. "Do not allow anyone else to manage your business unless you can watch their every move closely and understand their behavior; or you have strong reasons to believe in their character and ability. For investors, this criterion determines when you can let someone else make investment decisions for you." Graham's criterion written eighty years ago is so clear. Almost all the investors who lost their wealth in the financial products have violated the above two criteria. They did not have the ability to closely supervise the whereabouts of their funds, nor did they have sufficient reasons to believe in the character of the product issuers. They easily invested their own wealth solely based on others' glib tongue and a piece of commitment paper. They did not act as gatekeepers of their own wealth and ended up with nothing left even if the government punished the wrongdoers. "An ounce of prevention is worth a pound of cure." This is a phrase Munger often says. Destiny must be in one's own hands, and investors with a suitable money mind will try their best to find suspicious points in their investments to protect the safety of their principal. For example, whether the manager is trustworthy, whether the underlying assets are profitable, whether oneself can timely monitor the risks in the investment process, and whether the sales staff is obtaining large commissions. As long as any unreliable signs are found, these investors firmly will not invest their money. Do not desire to get rich quick. As in the capital market and anywhere else, making money is not easy, and desiring to get rich quick will lead to quick loss of wealth. In the capital market, the desire to get rich quickly often leads to investors over-allocating specific stocks, industries, or assets at the worst time. For example, buying high-risk stocks that can gain huge returns once an adventure succeeds, but the chance of success is very small, also known as "whispering stocks" by legendary fund manager Peter Lynch. "They often tell investors a story with explosive effects. These 'whispering stocks' have a hypnotic effect on people, and it is easy for you to believe that the story the company tells has an emotional appeal that can easily confuse you." This is like hearing a very tempting "sizzling" sound, making you salivate, but you did not notice that there is no steak on the grill. In the eyes of investors who lack the money mind, stable yield provided by blue chips such as China Yangtze Power cannot meet their demands. However, historical experience clearly shows that buying stocks lacking in safety solely based on imagined high yields is unwise. The long-term average investment return of general stocks is 9%-10%, which is also the average investment return of stock indexes in history, a benchmark to measure one's investment performance and the benchmark to measure fund investment performance.

On June 26, according to Sing Tao Daily,$EVERGRANDE (03333.HK)$Due to financial difficulties, the debt problems of Xu Jiayin, the founder, continue to ferment.

According to the court's ruling, if Xu Jiayin fails to repay the debt on time, creditors and Heng Xin Ju have the right to take legal action to apply for the takeover and sale of the properties under Xu's name. On June 25, Heng Xin Ju submitted an application to the High Court, requesting that Xu Jiayin surrender the vacant property in Cheung King Building in Tsim Sha Tsui in accordance with the mortgage order.

It is worth mentioning that as early as September last year, Xu Jiayin was taken compulsory measures for suspected illegal crimes. In addition, at the end of May this year, the China Securities Regulatory Commission issued an administrative penalty to Evergrande Real Estate, Xu Jiayin was fined RMB 47 million and banned from the securities market for life.

Is Xu Jiayin's property being auctioned off again?

On June 26, according to Sing Tao Daily, China Evergrande Group is facing financial difficulties, and its founder Xu Jiayin is facing legal lawsuits in Hong Kong due to debt problems.

In April this year, the Hong Kong High Court issued a mortgage order against Xu Jiayin, requiring him to repay debts exceeding RMB 5.3 billion. According to the court's ruling, if Xu Jiayin fails to repay the debt on time, creditors and Heng Xin Ju have the right to take legal action to apply for the takeover and sale of the properties under Xu's name.

On June 25, Heng Xin Ju submitted an application to the High Court, requesting that Xu Jiayin surrender the vacant property in Cheung King Building in Tsim Sha Tsui in accordance with the mortgage order. The court will proceed with the trial of this application. If the application is approved, Heng Xin Ju will auction the property, and the net proceeds will be used to repay part of Xu Jiayin's debt.

According to previous reports by Phoenix Finance, Xu Jiayin's Cheung King Building property is located at 144 Austin Road, Hong Kong. It is called Room A on the sixth floor of Cheung King Building and was built in 1978, with a house age of 45 years. Compared with other properties in Hong Kong, it belongs to the "old and worn out" series. The property was purchased by Xu Jiayin in November 1999 at a transaction price of HKD 1.75 million, and is still registered under Xu Jiayin's name.

It is worth mentioning that on May 21 this year, Xu Jiayin, the founder of Evergrande Group, and related personnel held the luxury flat in Tower B of No. 10 Boli Ching Road, Hong Kong, recently sold for HKD 470 million.

It is reported that Block 10 Boli Ching Roaddevelopment, where the luxury flat is located, was developed by the well-known Hong Kong real estate developer New World Development. It is located south of the hillside on Mount Nicholson in Hong Kong, surrounded by dense forests, and has a view of Repulse Bay. It is one of the most high-end communities in Hong Kong.

Public information shows that Xu Jiayin bought three B, C and E houses at No. 10 Mount Boli Ching Road in 2010, with a total market value of about HKD 2.5 billion. In 2021, in order to ease the financial difficulties, Xu Jiayin mortgaged these three luxury flats one after another. Finally, he could not avoid the fate of being auctioned off to repay debts.

Regulatory notice

The fact that Evergrande has falsified its financial statements has been known to the public for a long time, but it was only recently that the official decision on the administrative penalty for Evergrande Real Estate was issued.

On May 31 this year, the China Securities Regulatory Commission issued an administrative penalty to Evergrande Real Estate. It was found that Evergrande Real Estate used false financial data in its 2019 and 2020 annual reports to issue a total of RMB 20.8 billion in bonds to qualified investors on the exchange market, thereby engaging in fraudulent issuance activities.

The China Securities Regulatory Commission stated that Evergrande Real Estate covered up its actual financial situation by falsifying financial statements, and as a bond issuer, disclosed false information or did not disclose the information according to regulations, involving a huge amount of money and bad practices, which caused serious consequences for the existing issued bonds default.

The China Securities Regulatory Commission decided to order Evergrande Real Estate to correct its fraudulent issuance and illegal information disclosure behavior in the exchange bond market, give a warning and impose a fine of RMB 4.175 billion. At the same time, to those who played a role in organizing and directing the events such as the company's chairman and actual controller Xu Jiayin were imposed with a fine of RMB 47 million and a lifelong ban on entering the securities market.

Meanwhile, the director and actual controller of the company who played an organizing and directing role, Xu Jiayin, were fined 47 million yuan and face a lifetime ban from the market.

On September 28th last year, Evergrande announced in an insider information disclosure to the Hong Kong Stock Exchange that Xu Jiayin, its executive director and chairman of the board of directors, had been taken into custody on suspicion of illegal activities based on notifications received from relevant authorities.

Regarding the recent situation of Evergrande, suitable investors have yet to be found as it is still in liquidation. On May 28th, the company released the latest quarterly update. The liquidator of Evergrande said in an announcement that considering the debt level of the company and the challenges facing the group's businesses and operations, as well as the lack of significant new investments, the liquidators have not yet identified a restructuring plan that can satisfy the resumption guidance and resume trading of company shares.

Huang Yongshi, the liquidator of Evergrande, stated that potential investors who wish to participate in restructuring the company or any of its subsidiaries are welcome to contact them.

Editor/tolk