From Warehouse Keeper to Millionaire: Journey of Yang Huaiding in China's Stock Market
Biography of Yang Huaiding
In 1990, Yang Huaiding was a 40-year-old warehouse keeper at
a steel factory in Shanghai. He earned 51 yuan (US$7.80) a month.Today, Yang is
celebrated as "Millionaire Yang" in China's stock market lore. Yang's
journey to wealth began when he made his first million by investing in the
initial batch of eight stocks after the Shanghai stock market opened in
December of that year. His success led him to transition into full-time
trading, leaving his warehouse job behind.
A Stock Market Pioneer: Yang's Resilience Amidst Boom and
Bust
Career Transformation:
Reflecting on his journey, Yang, now 70, acknowledges the
pivotal role the stock market played in reshaping his career. He faced and
survived three significant market downturns: the 1997 Asian financial crisis,
the 2008 Lehman Brothers collapse, and the 2015 domestic market crash. He
credits the allure of substantial profits in the early days for motivating his
career switch.
Pride in China's Market Growth:
The inception of China's stock market three decades ago is a
source of national pride and captivation. With a market capitalization of
US$10.6 trillion, it has burgeoned from its humble beginnings to become the
world's second-largest market, trailing only the US, whose Wall Street history
dates back to May 1792. Yang's journey from poverty to prosperity serves as a
beacon of hope for the 175 million individual investors who aspire to replicate
his success.
Yang Huaiding: A Tale of Risk and Courage in Investing
Origin of the "Daring to Eat Crab" Metaphor:
Yang, born in Zhenjiang, eastern China, in 1950, often
likened his bold investment ventures to "daring to eat crab." This
metaphor draws from a Chinese legend where the discovery of sustenance from a
seemingly intimidating source exemplifies courage and innovation.
A Motto of Courage:
In the early 1990s, Yang embraced this ethos by printing the
slogan "Learn from the courage of those who dare to eat crab and conduct
risky personal investments" on his business card. This motto encapsulated
his willingness to take risks and explore uncharted investment territories.
A Contrasting Style:
Yang's investment approach stood in stark contrast to the
predatory greed portrayed by Gordon Gekko in the 1987 film "Wall
Street." He eschewed extravagance, opting for a modest lifestyle. Yang
wore polyester clothes and resided with his wife and son in an unassuming
apartment block adorned with weeds and coal piles, embodying a simplicity that
defied conventional notions of wealth and success.
China's Late Entry into Stock Market Experiment
Late Arrival:
China's foray into the stock market commenced in late 1990,
with the Shenzhen stock exchange launching on December 1st, followed by
Shanghai's exchange just 18 days later. The initiative aimed to channelize the
nation's abundant household savings into capital, primarily targeting
financially struggling state-owned enterprises teetering on the brink of
insolvency.
Shanghai's Selection:
Despite Beijing being the political capital, Shanghai was chosen as the inaugural site for the stock exchange over Beijing. This decision was driven by political considerations, as Beijing was still grappling with the aftermath of the student-led protests preceding the Tiananmen Square crackdown in June 1989. Shanghai's historical significance as the birthplace of banking giant HSBC Holdings and insurer AIG Group likely played a role in its selection.
The Birthplace of Trading: Astor House Hotel Ballroom
Historic Trading Floor:
The Astor House Hotel, perched on the Shanghai bund with a
view of the Huangpu River, served as the inaugural trading floor for the
exchange. Mayor Zhu Rongji and his team orchestrated its creation within a mere
year of being tasked with the project. This ballroom was where Yang Huaiding
secured some of his earliest stock wins.
Yang's Journey: From Financial Experiments to Million-Dollar
Success
Early Investment Wisdom:
Yang Huaiding's investment strategy was rooted in confidence
and insight. Recognizing the undervaluation of shares in Shanghai Vacuum
Electron Device, a state-owned television tube company, he invested heavily,
buying thousands of shares at 80 yuan each. He wisely exited his position at
800 yuan, just before the stock soared to 2,000 yuan.
Beginning of Financial Ventures:
Yang's journey commenced during China's financial-market
experiments in the late 1980s. He took a bold step by pooling together $8,000
to invest in bonds that resembled bank IOUs, providing him with his initial
exposure to the world of finance.
Transition to Full-Time Trading:
With his keen eye for opportunity, Yang achieved his first
million by dabbling in the initial batch of eight stocks when the local bourse
began operating in December 1990. This success propelled him into full-time
trading, marking the beginning of his remarkable journey to financial
prosperity.Reflections on Past and Present:
Yang reminisces about the stock market of thirty years ago,
characterizing it as a "gambling game." He laments that even today,
many retail investors still view stocks primarily as a form of gambling rather
than as investment opportunities.
From Warehouse Keeper to Millionaire: Journey of Yang Huaiding in China's Stock Market / Biography of Yang Huaiding
Yang Huaiding: From Proletarian to Financial Maverick
Proletarian Persona:
Yang Huaiding's image as a chain-smoking proletarian became
intertwined with his brand. In 1988, while working as a warehouse attendant in
a struggling Shanghai steel factory, he earned a modest income of a few hundred
dollars per year. Despite his humble earnings, he managed to save enough to
enter China's nascent bond markets.
Arbitrage Opportunity:
Yang's astute observation, derived from meticulous analysis
of local newspapers, revealed disparities in treasury bond prices across
different cities. Seizing this opportunity, he embarked on overnight trips to
purchase bonds in cities like Hefei, Anhui province, at lower prices, and then
sold them in Shanghai at a substantial profit.
The "First Bucket of Gold":
His initial success in bond arbitrage yielded Rmb800 ($125),
earning him the moniker of the "first bucket of gold." His
achievements not only attracted attention but also drew in other investors,
easing local government funding crises and garnering approval from Beijing.
Voluntary Tax Declaration:
Yang's integrity further solidified his standing with
authorities when, in 1989, he voluntarily disclosed his bond investment income
to the tax bureau. Despite his substantial earnings, he was informed that he
was not liable to pay tax on his investment gains.
Transition to Equity Investment:
The success of his bond trading venture laid the groundwork
for Yang's foray into equity investment. With the establishment of new
exchanges in Shanghai and Shenzhen in 1990, he swiftly transitioned to equity
trading. On the inaugural trading day, he purchased 500 shares in an electrical
vacuum company, witnessing a significant windfall that surpassed his annual
salary at the steelworks in just one afternoon.
Shanghai Stock Exchange: A Symbol of China's Economic
Transformation
Delayed Move to Lujiazui:
It took seven years for the Shanghai stock exchange to
relocate to its new building in the vibrant Lujiazui financial district. This
district is home to architectural marvels such as the 632-meter Shanghai Tower,
the world's second-tallest skyscraper, as well as other landmarks like the
Shanghai World Financial Center and Jinmao Tower.
Rise of Communist-style Capitalism:
The establishment of these two stock exchanges marked
China's transition towards a Communist-style capitalism. This shift propelled
China from being merely a manufacturing hub for global giants like Apple, Nike,
and Coca-Cola to becoming an economic powerhouse in its own right. These
changes transcended industries, sizes, and values, reshaping the country's
economic landscape.
Market Expansion:
Presently, the Shanghai stock exchange boasts 1,784 listed
companies, while Shenzhen hosts 2,341, with a combined market value of 69.4
trillion yuan (US$10.6 trillion). This surpasses the previous peak recorded in
2015 and represents a significant leap from the 2.94 trillion yuan market value
recorded in 2002.
