Chapter 26: The Battle of Capital and the CSRC Inquiry

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The moment the clock struck nine, a massive wave of short orders slammed into the order book for the Shanghai copper futures 0912 contract. The opening price of 47,890 yuan per ton was driven down to 47,650 yuan within barely a minute, and it appeared there was still room for further decline.

Yan Fei quickly reviewed the recent low and calculated that the ultra-short-term support level lay at 47,100 yuan per ton. Yesterday’s settlement price had been 49,250 yuan per ton, while the maximum permissible decline was five percent, or 46,790 yuan. That was 310 yuan below the support level. If the bears were fierce enough today to smash through support, the contract would most likely close at its daily limit down.

Keeping his eyes on the market, Yan Fei watched for five minutes. When the price fell to 47,120 yuan, he noticed the bulls’ strength suddenly surge as they engaged the bears in a brutal struggle, their resistance extraordinarily strong.

The two sides remained locked in stalemate for a minute. Then the bears abruptly slammed down a huge order for five thousand lots, instantly breaking through the round-number barrier at 47,100 and driving the Shanghai copper futures 0912 contract straight to 47,060.

Seeing 47,100 broken, Yan Fei’s expression grew solemn. The market was moving somewhat differently from what he had expected. Logically speaking, a short order of five thousand lots should have been able to drive the price down by far more than sixty yuan. This meant there were an enormous number of bullish orders below, and even a massive short order was struggling to shake the bulls’ strength.

As Yan Fei pondered, a three-thousand-lot buy order suddenly surged forward, instantly swallowing the short orders above and pulling the price back to 47,100.

The bulls and bears began fighting for control around 47,100. Watching the spectacular battle, Yan Fei felt as though he were witnessing two armies of a million soldiers hacking each other apart in a bloody slaughter, neither side yielding an inch.

After thinking for a minute, Yan Fei stopped hesitating. He decided to stand with the bulls and gamble on his luck, closing his 2,683-lot short position at market and adding another burst of momentum to the bulls.

In less than three seconds, his 2,683-lot short-closing order was swallowed up, and the market price of the Shanghai copper futures 0912 contract rose to 47,130.

Looking at the unrealized profit of 51.2187 million yuan on his account, together with his previous principal of 67.207 million yuan, Yan Fei’s total funds had reached 118.4257 million yuan.

Faced with such a sum, Yan Fei merely smiled faintly. Then he fixed his serious gaze on the market, watching the Shanghai copper futures 0912 contract fluctuate around 47,140 while the bulls’ strength continued to grow and the bears’ power began to weaken.

Without the slightest hesitation, Yan Fei threw all the funds in his account into the market, instantly pulling the Shanghai copper futures 0912 contract up to 47,180—a direct leap of four price levels.

The moment his huge buy order for 5,020 lots appeared, it swept away the short orders above. The bears fought back fiercely, immediately slamming down a three-thousand-lot short order, but they failed to push the price down.

At this sight, not only Yan Fei but all the retail investors watching were stunned for a moment. That three-thousand-lot short order had appeared simultaneously with another three-thousand-lot buy order and been executed instantly. This showed that the main bullish players had begun attacking proactively.

With that signal, nearly every spectator could tell that the situation had reversed. The Shanghai copper futures 0912 contract was certain to rise—at least for the day.

With this consensus established, countless buy orders surged forward. Yan Fei smiled confidently and switched the screen to the rebar futures 0912 contract. The day’s opening price was 4,020 yuan per ton, while the current low was 4,011 yuan. The price was now fluctuating around 4,030.

Yan Fei watched the market for more than ten minutes and found that trading today was relatively mild. The battle between the bulls and bears was not particularly fierce. Perhaps he had arrived too late; after all, more than thirty minutes had passed since the opening.

Although rebar had fallen on heavy volume today, with the decline exceeding 1.5 percent, turnover was not much higher than yesterday’s. It would probably be a day of sideways consolidation. The real question was whether the bulls and bears would fight a decisive battle tomorrow.

Yan Fei switched to the Shanghai-Shenzhen 300 Index. It had opened at 2,824.64, twenty-four points below yesterday’s close, but was pulled up immediately after the opening. It had already turned positive and was standing at 2,854.56.

After examining the trading volume on both sides, Yan Fei discovered that the bulls’ attack during the first five minutes had been fierce, with their volume considerably stronger than the bears’. The index would most likely close more than one percent higher today.

He watched the market for more than ten minutes while calculating the difference between buy-side and sell-side volume. He concluded that, during the first half hour, the buy-side volume of the Shanghai-Shenzhen 300 constituent stocks exceeded the sell-side volume by more than two million lots, while net capital inflow from the main players had reached 1.6 billion yuan.

Turnover had also expanded considerably compared with yesterday. Yan Fei therefore became completely certain that his speculation was correct. He closed the page and prepared to bypass the firewall to check overseas news and political developments.

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He had barely begun reading when his phone suddenly rang. Picking it up, Yan Fei saw that it was a market alert he had set earlier: the price of ST Dongyuan had broken open, and its one-line daily limit-up board had been breached.

Yan Fei immediately switched the page to ST Dongyuan. Countless orders were frantically selling, and the stock had already fallen from its five-percent limit-up to a four-percent gain.

Without the slightest hesitation, Yan Fei dumped all the shares in his hands. Because the position was relatively small, the orders were filled in an instant. By the end, his account held roughly 300,000 yuan. Compared with the 100,000 yuan he had invested earlier, his money had tripled.

After selling ST Dongyuan, Yan Fei remembered that he had previously borrowed 100,000 yuan from his teacher. He immediately transferred 150,000 yuan to him, with the extra 50,000 serving as thanks for his teacher’s help. He left the remaining 150,000 untouched in his stock account.

After selling the stock, Yan Fei remembered that he had not checked his international crude-oil futures account for two days. He opened the market and saw that crude-oil futures had risen to 34.86 dollars per barrel.

After closing his position on the twenty-fourth of the previous month, Yan Fei’s account had held 5.42 million dollars. When crude oil futures later corrected down to 33.14 dollars per barrel, he had gone all in on the long side. Although he had missed the chance to short at the peak and strike back, his account had now grown to 11 million dollars, with his position reaching 3,270 lots.

That position already counted as a major force in the international crude-oil futures market. Every move he made was being watched, and it would be difficult to enter and exit quickly as he had before.

After calculating the trend in international crude oil, Yan Fei suddenly remembered that, in his previous life, the most powerful nation on Blue Star, the Western American Federation, had experienced a similar situation. At the time, its government had not anticipated that the economic recovery would rebound at astonishing speed under the driving force of the Great Eastern Nation, allowing the country to emerge from its economic crisis in a very short time. This had also caused many industrial raw materials to fall behind the pace of industrial recovery. Crude-oil futures had borne the brunt, undergoing a massive and rapid surge.

The conditions on Earth today were much the same as those on Blue Star. China had also demonstrated an extremely strong capacity for economic recovery. It might well create a situation resembling that of the Great Eastern Nation. If that happened, America’s economy would recover rapidly, and crude-oil futures would certainly soar again.

Yan Fei was preparing to gather more information to verify his theory when his phone suddenly rang. It was an unfamiliar number. He answered and said, “Hello, this is Yan Fei. What can I do for you?”

The voice of a middle-aged man came through. “This is Li Wei from the Securities Regulatory Commission. I need to speak with you about something. Come to the Commission now.”

“All right,” Yan Fei replied before the other party hung up.

After thinking for a moment, Yan Fei remembered that his martial uncle, Li Feng, had mentioned a few days earlier that the Commission wanted to question him. A man of upright character had nothing to fear from shadows. After tidying himself up, he went downstairs, got into his GT500, and drove to the Securities Regulatory Commission.

Half an hour later, following the staff’s directions, Yan Fei arrived at a conference room. A few minutes later, three middle-aged men entered and sat across from him, watching him with stern expressions.

The man in the middle spoke first. “I’m Li Wei, one of the Commission’s members. We asked you here to inquire about a few matters. Don’t be nervous. This is only a routine inquiry.”

Yan Fei nodded and said solemnly, “Please ask whatever you wish, gentlemen. I will tell you everything I know.”

Li Wei nodded and said in a deep voice, “We have investigated your situation and obtained some leads and evidence. Have you had private meals or attended private gatherings with Li Feng?”

Yan Fei thought for a moment before replying evenly, “Li Feng is my martial uncle. It is perfectly reasonable for me to invite an elder to dinner and maintain our relationship, isn’t it?”

The middle-aged man beside Li Wei slapped the table and said coldly, “Tell us the truth. We already have evidence, and we have submitted it to the police, who have arrested quite a few people. Was there insider trading between you and Li Feng? Give us an honest answer.”

Yan Fei’s expression turned cold. He stared directly at the man and said icily, “Sir, one may eat carelessly, but one must not speak carelessly. Be careful—I could sue you for defamation. If you throw accusations around recklessly, they may come back to bite you.”

The middle-aged man was about to lose his temper, but Li Wei quickly intervened. “Enough, Old Zhang. Don’t be impulsive. Mr. Yan is only here for a routine inquiry and is not a suspect. Mind your attitude.”

Hearing this, Zhang Bingfa suppressed his anger and asked coldly, “Yan Fei, your former colleague and former girlfriend, Li Xiaoxiao, reported that you engaged in insider trading with Li Feng and frequently visited his office. Is that true?”

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Yan Fei gave a cold laugh. He had no intention of following Zhang Bingfa’s line of reasoning. Instead, he said calmly, “Gentlemen, since you have investigated me, you have seen all my trading records. Tell me, among Shanghai copper futures, the Shanghai-Shenzhen 300, rebar futures, and international crude-oil futures, which market could possibly have given me access to insider information? Even Li Feng himself couldn’t manage that, could he?”

The other middle-aged man nodded and said gravely, “That’s right. With the enormous volume of such markets, dozens or even hundreds of major players are involved. It would be impossible for them all to coordinate and agree on whether to go long or short on a particular day. In my view, the report of insider trading is pure nonsense.”

Li Wei immediately picked up the thread. “Old Wang is right. Li Xiaoxiao and Yan Fei have a personal grudge, so it is entirely possible that she made a reckless accusation. Besides, women can become completely unreasonable when they make a scene.”

Hearing the two officials speak in his defense, Yan Fei gave them a grateful look. Zhang Bingfa, meanwhile, shut his mouth with an unhappy expression. From both a logical and trading standpoint, there was nothing wrong with Yan Fei, even if he had earned several hundred million yuan.

They asked a few more questions of little consequence. Yan Fei answered each one reasonably, leaving no opening to criticize. The three men eventually ended the inquiry. As Li Wei walked Yan Fei out, he said quietly, “I believe you are an investment genius, but remember to keep a low profile. Stop posting on Tianya, and invest your earnings in the real economy as soon as possible.”

Hearing the profound meaning behind Li Wei’s words, Yan Fei thanked him. He drove home, sat down on the sofa, and carefully considered what Li Wei had said. From their brief interaction, Yan Fei judged that Li Wei simply admired him and had deliberately offered him a warning.

After a long while, Yan Fei let out a heavy sigh and murmured, “It seems I’ve earned too much and stepped on certain people’s toes. Now they’re sending someone out to suppress me. The ones who have appeared so far are probably just minor players. It looks like I can’t leave too much cash sitting in my account.”

Yan Fei smiled helplessly. He found a law firm online and prepared to sue Li Xiaoxiao for maliciously reporting and defaming him. He soon reached an agreement with the firm, signed an electronic contract, and transferred 30,000 yuan in legal fees.

After that, Yan Fei lay on the sofa and continued reading. By nightfall, Chen An called. Yan Fei answered with a smile. “Teacher, the extra 50,000 yuan was a token of my respect. Your student has money now, so you don’t need to worry!”

After chatting for a few minutes, Professor Chen An repeatedly urged Yan Fei to return to school. But Yan Fei was intent on building a business empire and politely declined the invitation, leaving Professor Chen An deeply saddened.

The next morning, after breakfast, Yan Fei watched the Shanghai copper futures 0912 contract. During the opening auction, the bulls and bears had already begun fighting fiercely. Although the contract ultimately opened flat, turnover had more than doubled.

After the opening, the bulls immediately launched a ferocious attack. Huge orders surged forward one after another, pulling the market up to 47,900 in barely a minute, but this also provoked a violent counterattack from the bears.

Several thousand-lot short orders slammed down, instantly driving the market below the waterline. The bulls refused to yield. A four-thousand-lot buy order immediately surged forward, pulling the market back above the waterline and continuing the attack upward.

Yan Fei watched the intense battle between bulls and bears for more than ten minutes. In the end, the bulls proved stronger, steadily pushing the market higher amid the exchange of fire. It had now climbed to a gain of 1.5 percent.

From this alone, Yan Fei could tell by instinct that the market would rise sharply today. There was no need to watch the rest of the session, so he switched directly to the rebar futures market.

Nearly twenty minutes after the opening, the market was still engaged in fierce combat within a narrow range. Turnover continued to expand as both sides fought with all their strength, neither yielding a single step. It was like the Battle of Xiangji Temple, with the two armies locked in hand-to-hand combat within a confined space, hacking each other apart.

Faced with such an electrifying battle, countless retail investors chose sides. Some backed the bulls, while others backed the bears. Orders continued surging forward, and neither side was willing to retreat even one step.

Every time a huge short order slammed down, a huge buy order immediately surged forward. The two sides remained locked in a meat-grinder-like struggle, while the entire market continued to fluctuate within an extremely narrow range.

Yan Fei saw that turnover during the first half hour had reached 36 billion yuan. He estimated that the day’s total turnover might break 111 billion yuan. Yet the buy and sell orders remained locked together, with the difference never exceeding two thousand lots.

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