In early October, Evergrande's debt difficulties aroused widespread concern from all walks of life, which not only affected the operation and development of Evergrande Group itself, but also affected the vital interests of millions of owners, suppliers, investors and employees.
In this storm, some people chose a dead end, some people chose to exit, and their stories reflect the risks and changes in China's real estate market.
Big gamblers in heavy real estate
Kwan Shanxiang is the chairman of Shanxiang Fund and has a brilliant investment experience. He was one of the first private equity investors in China.
Participated in the early investment of Alibaba, Baidu, JD.com and other well-known enterprises, and successfully exited in 2007, earning huge returns.
He is also one of the first people in China to engage in quantitative hedging investment, using mathematical models and computer technology to achieve stable profits in stocks, futures, options and other markets.
He is known as the "King of China's Quantification" and was ranked No. 100 on Forbes' list of China's richest people in 2014.
However, Kwan began to shift his investment style in 2016, shifting from quantitative hedging to heavy real estate.
He believes that China's real estate market still has huge potential and demand, and the relevant departments will not let house prices fall sharply.
Through a number of fund products under his subsidiary, he bought the stocks of well-known real estate companies such as Evergrande, Country Garden and Sunac, and continued to increase his position. He even increased leverage by borrowing and matching capital in order to obtain higher returns.
However, what Guan did not expect was that China's real estate market began to show a turning point in 2019. Relevant departments have issued strict regulatory policies such as the "three red lines", which limit the financing space and expansion speed of housing enterprises.
At the same time, the new crown epidemic has also brought shocks and uncertainties to the real estate market. These factors have led to a sharp decline in the stock of real estate companies, especially Evergrande Group, which fell into serious debt difficulties in 2021, and its stock price plummeted by more than 80%.
Guan Shanxiang suffered heavy losses in this difficulty, and he owed more than 2 billion yuan in loans to a number of banks, brokers, trusts and other financial institutions.
The interest and principal of these loans need to be repaid by him in a timely manner, otherwise the risk of margin call or forced liquidation will be triggered.
In this situation, Guan Shanxiang felt unprecedented despair and helplessness. He couldn't afford his investment failure and debt difficulties, nor could he face his family, partners and investors.
He believes that he has no way out but to choose the most tragic way to end his life. It is reported that on the evening of September 26, 2021, he committed suicide by jumping from the balcony of a high-end residential area in Tianhe District, Guangzhou, at the age of 49.
Before his death, he also left a suicide note to his wife, son and daughter, expressing his deep apologies and love to them and asking them to forgive him for his mistakes and unfilial piety.
Coolers who restructure at a loss
Gülen is a high-profile fund manager, and the investment community has praised him for his abilities and vision. He was once one of the most successful fund managers under CEIBS Fund, managing a number of star fund products such as CEIBS New Blue Chip and CEIBS Value Discovery.
He takes value investing as his leading idea, focusing on the intrinsic value and growth of enterprises, as well as focusing on market hotspots and opportunities.
He has achieved good results in consumer, pharmaceutical, technology and other industries, and has been highly praised by fund rating agencies many times.
However, Gülen also faced huge losses. In the second half of 2020, he began to adjust his portfolio and increase his allocation to the real estate sector.
Gülen was also hit hard by this difficulty. According to media reports, he lost more than 2.3 billion yuan in Evergrande's shares.
And because he manages multiple public fund products, he also faces redemption pressure from investors and pressure from regulators.
He manages more than RMB 50 billion in fund assets. These fund products have been affected by Evergrande's difficulties, and the net value of some fund products has fallen sharply, and even broken net.
In this case, Gülen did not choose to give up or run away, but chose to calm down and regroup. He recognized that his investment judgment had been wrong, and he acknowledged that his portfolio was risky.
He did not stick to his position, but adjusted his investment strategy in time, reduced the allocation to the real estate industry, and increased the dispersion of other industries.
Nor did he ignore the concerns of his investors and regulators, but actively communicated and explained to them to gain their understanding and support.
According to reports, Gülen officially resigned as a fund manager of all fund products under CEIBS Fund in early October 2021. He said it was his personal decision and there was no contradiction or disagreement with the CEIBS Fund.
He thanked CEIBS Fund for the platform and opportunities he had, as well as investors for their trust and support.
He said that he will temporarily leave the public fund industry for a period of rest and study, and may return to the investment world in other forms in the future.
epilogue
Their stories tell us that investing requires not only competence and vision, but also rationality and calmness. In the face of market changes and risks, we must not blindly follow the trend or insist on going their own way, but must have a sober judgment and appropriate adjustment.
In the face of your own mistakes and failures, you must not run away or despair, but have the courage to admit and correct. Only in this way can we achieve long-term stable returns in investment and bring positive and healthy impact to the Chinese real estate market.