Tech Giants: Starting from Bankrupt Companies

119: Chapter 119: A Trillion-Dollar Game and a Liquidity DilemmaNovember 20th, 7:00 AM, the top-floor conference room of Spark Technology headquarters in Shenzhen.

Outside the floor-to-ceiling windows of the conference room, morning mist shrouded Shencheng Bay, and the mountains of the New Territories in Hong Kong were faintly visible on the skyline. Su Chen stood by the window, holding a cup of black coffee, his gaze piercing through the mist toward the distance. Behind this habitual action lay deep contemplation before making the most significant capital decision since the founding of Spark Technology.

”Mr. Su, everyone is here,” Lin Wan whispered a reminder.

Sitting around the conference table were three people: CFO Shen Nanpeng, head of Spark Trust Chen Peng, and Lin Wan. This was Spark Technology’s core finance and capital team, and each person wore a solemn expression.

Shen Nanpeng turned on the projector, and a blue light screen was cast onto the white wall. The very first chart made the atmosphere in the conference room suddenly tense.

”Spark Technology Liquidity Risk Warning Report”

Data cutoff: November 17, 2017

”Mr. Su, we are facing a dangerous paradox,” Shen Nanpeng’s voice was calm but serious. ”The stock price has broken through 3,900 rmb, with a market value of 4.35 trillion, and the market is jubilant. However, beneath this appearance, liquidity is drying up at an alarming rate.”

He switched to the next page:

Average daily turnover curve:

August: 58 billion rmb

September: 32 billion rmb

October: 18 billion rmb

November (first half): 8 billion rmb

”In three months, the turnover has shrunk by 86%,” Shen Nanpeng used a laser pointer to point at the almost vertical downward curve. ”What is more dangerous is the turnover rate—it has dropped to 0.05%. What does this mean? It means Spark Technology stock has effectively exited the trading market and become a ’collector’s item’.”

Lin Wan added: ”The institutional feedback we have monitored is very consistent: ’We want to allocate, but we can’t buy any.’ Social security funds, insurance companies, sovereign wealth funds—these long-term capital entities want to buy in as core asset allocations, but they simply cannot sweep up any shares in the market.”

Chen Peng called up the equity structure chart: ”The root cause is here. Spark Technology has a total share capital of 1.1 billion shares, with only 140 million tradable shares, accounting for 12.7%. And within these 140 million shares, state-owned assets lock up 40%, and long-term institutional investors lock up 20%. The actual tradable chips are less than 60 million shares, accounting for 5% of the total share capital.”

He paused, his tone deepening: ”A 5% floating supply is supporting a market value of 4.35 trillion. This is like a toothpick holding up a skyscraper; any disturbance could lead to a collapse.”

Su Chen returned to his seat, his fingers tapping lightly on the table; this was his habitual action before making major decisions.

”What is the regulator’s attitude?” he asked.

Shen Nanpeng pulled up the meeting minutes: ”The CSRC interviewed us last week. Vice Chairman Chen Ming’s exact words were: ’Spark Technology’s liquidity problem has already affected the normal functioning of the capital market. If one cannot even buy the stocks of high-quality companies, how can the original intention of the capital market to serve the real economy be realized?’”

”A more direct signal is—” Lin Wan took over, ”officials from the Ministry of Finance and SASAC have indicated in private communications that if Spark Technology cannot solve the liquidity problem itself, they might consider guiding state-owned shareholders to reduce their holdings moderately. But they hope we will take the initiative to reduce holdings first.”

Su Chen listened silently, his gaze moving between the data charts. In the conference room, only the hissing of the air conditioning vents and the rustling sound of Shen Nanpeng occasionally turning the pages of the report remained.

”So, we must reduce our holdings,” Su Chen finally spoke, not as a question, but as a statement.

”But reducing holdings will be interpreted by the market as shareholders not being optimistic,” Lin Wan voiced her concern. ”The stock price has risen from 1 rmb to 3,900 rmb, and Mr. Su, you haven’t reduced your holdings by a single share. If we reduce them now, no matter what the reason is, it will arouse suspicion.”

Su Chen got up and walked to the whiteboard, picking up a marker.

”Let’s analyze it.” He wrote two terms on the whiteboard:

Option A: Do not reduce holdings

Option B: Reduce holdings

”The consequence of Option A: Liquidity continues to dry up, and we may eventually be forcibly intervened by regulators, or once there is negative news, it will trigger a stampede. At that time, it won’t be us actively reducing holdings, but a passive collapse.”

He drew a red ”×” after ”Option A”.

”The consequence of Option B: The stock price will be under pressure in the short term, but the market will regain liquidity, long-term capital can enter, and the valuation system will return to normal. As long as we operate transparently and explain the use of funds, the market will eventually understand.”

He drew a blue ”√” after ”Option B”.

”Between two evils,” Su Chen turned around, ”I choose B.”

He walked back to his seat, his gaze sweeping over the three people: ”But how to reduce them is an art.”

Chen Peng immediately followed up: ”I suggest operating through Spark Trust. The trust currently holds 8.64% of Spark Technology’s shares. These shares are dispersed across 37 employee incentive sub-accounts, with each account holding no more than 0.5%. If we reduce a portion of them, as long as a single account’s reduction does not trigger the 5% shareholder disclosure obligation, the market will not know that a related party is conducting a centralized reduction.”

Shen Nanpeng calculated quickly: ”The trust holds 95 million shares. We reduce 40 million shares and keep 55 million shares for future employee incentives. The reduction ratio is 3.64%, which is just below the 5% disclosure red line.”

”What about the price?” Su Chen asked.

”The current stock price is 3,950 rmb. We set a floor price of 3,800 rmb, a discount of 3.8%.” Chen Peng pulled up historical data. ”This discount rate is reasonable in block trades; it won’t make the buyer feel it’s too expensive, nor will it make the market feel we are dumping.”

”Time window?”

”Ten trading days, from November 21st to December 4th.” Chen Peng had already prepared the plan. ”No more than 4 million shares per day. 60% will be through block trades—I have already contacted 15 long-term institutions; 40% will be through centralized bidding, using algorithmic trading to sell evenly to avoid impacting the market.”

Su Chen thought for a minute. In those sixty seconds, the conference room was so quiet that one could hear their own heartbeat.

”Three principles,” he finally spoke. ”First, full transparency. We must announce the reduction plan and the use of funds in advance; no black-box operations.”

”Second, price protection. Set up a market stabilization plan. If the stock price falls by more than 7% in a single day, suspend the reduction immediately, and use our own funds to support the bottom if necessary. But we will try our best not to use this tool; using it would only prove that the market is fragile.”

”Third, the use of funds must be justifiable. This 150 billion cannot just lie in the account, and certainly cannot be transferred overseas. Every cent must be used for Spark Technology’s future layout.”

He wrote two directions on the whiteboard:

1. Technology M&A Capital

2. Next-Generation Technology Companies

”Mr. Shen, Mr. Chen, you have three days to come up with a detailed plan. Lin Wan, prepare the announcement and media communication.” Su Chen looked at his watch. ”It is now 7:48 AM on November 20th. Tomorrow, the first piece of this 100-billion-scale chess game will be placed.”

After the meeting ended and the three left, Su Chen remained in the conference room alone.

He walked to the window; the morning mist had dissipated, and the sea of Shencheng Bay was sparkling under the morning sun. In the distance, the Hong Kong-Zhuhai-Macao Bridge spanned the sea like a long rainbow, connecting the three places.

Three years ago, he stood in that 100-square-meter office in the tech park, looking at the dilapidated industrial zone outside the window, dreaming of building China’s own chip.

Three years later, he stood on the top floor of the Spark Building, about to operate a 150 billion capital operation.

Outside the window, a plane streaked across the sky, leaving a long contrail.

Like the first move a chess player makes on the board.

November 21st, 6:00 AM, Shanghai Municipality Stock Exchange Data Center.

Chen Peng and his trading team were already in place. Eight screens surrounded him, displaying: major global stock index futures, rmb exchange rates, block trade declaration systems, algorithmic trading consoles, real-time stock price trends, transaction details, capital flows, and public opinion monitoring.

”Two hours and fifteen minutes until market opening,” Assistant Liu reported. ”The block trade declaration has been submitted, a total of 4.5 million shares in three tranches, and the counterparty has confirmed.”

Chen Peng nodded, his eyes fixed on the screen. He was forty-five years old, a former managing director of Goldman Sachs Asia, and was poached by Su Chen two years ago to set up Spark Trust. He had operated countless large transactions in his career, but this one today concerned the stability of a 4 trillion market value.

”Are the algorithmic trading parameters set?” he asked.

”Settings complete,” the quantitative trading supervisor replied. ”We plan to sell 1.5 million shares today, executed evenly in 3,600 tranches, with no more than 500 shares per tranche, a price floor of 3,780 rmb, and maximum impact cost controlled within 0.5%.”

Chen Peng took a deep breath. This was not a simple sale; it was a precise surgery—to excise the tumor (liquidity drying up) without alerting the market, while not harming healthy tissue (stock price stability).

At 9:15 AM, centralized bidding began.

Spark Technology buy/sell orders: 42 billion buy orders, 300 million sell orders. The ratio was 140:1, still extremely imbalanced.

At 9:25 AM, bidding ended, with an opening price of 3,920 rmb, down 0.76% from yesterday’s closing price of 3,950 rmb.

”Normal correction,” Evan Chen said into the microphone. ”Execute as planned.”

At 9:30, continuous bidding began.

Algorithmic trading started. On the screen, the green transaction records began to flicker:

09:30:01 3,920.00 200 shares

09:30:03 3,920.50 300 shares

09:30:05 3,919.80 500 shares

Each transaction was very small, like a gentle rain moistening things silently.

At the same time, the Shanghai Stock Exchange’s block trading platform posted three transactions:

Spark Technology block trading

1. Transfer of 1.8 million shares to the National Social Security Fund 503 Portfolio, price 3,820 rmb, a 3.3% discount

2. Transfer of 1.5 million shares to Huaxia Life Insurance Asset Management, price 3,815 rmb, a 3.4% discount

3. Transfer of 1.2 million shares to Temasek of Singapore, price 3,830 rmb, a 3.0% discount

Total transaction amount: 17.2 billion rmb

This announcement was like a pebble thrown into a calm lake.

The stock forum exploded instantly:

”Block trading! Who is selling?”

”Social security, insurance, and Temasek are buying; this is the national team entering the market!”

”The price is at a 3-4% discount, does that mean the seller is in a hurry to get out?”

”Could it be a major shareholder reducing their stake?”

At 9:45, Spark Technology’s stock price dropped to 3,890 rmb, a decline of 1.5%.

Evan Chen stared intently at the market board. On the screen, sell orders began to increase—some retail investors, seeing the block trade discount and fearing it was a negative signal, chose to take profits.

But the buy orders were stronger. The ”national team,” such as social security and insurance funds, entering the market sent a clear signal: long-term capital was bullish on Spark.

At 10:00, the stock price began to rebound.

At 10:30, it returned to 3,910 rmb.

At 11:00, it was 3,925 rmb.

”How much has been sold through algorithmic trading?” Evan Chen asked.

”860,000 shares, at an average price of 3,890 rmb,” the quantitative supervisor reported. ”The market’s absorption capacity is very strong; our selling has not caused a significant impact on the price.”

At 3:00 PM, the market closed. Spark Technology closed at 3,910 rmb, down 1.01% from yesterday, with a trading volume of 18.5 billion rmb—more than double the 8 billion from the previous few days.

The Dragon and Tiger List showed: the top five buyers were all institutional seats, totaling 18.5 billion rmb in purchases; the top five sellers were very scattered, with the largest selling seat only at 2.8 billion rmb.

”Success,” Evan Chen let out a long sigh of relief. ”The market interpreted it as ’institutions buying the dip by taking advantage of the stake reduction,’ rather than ’the major shareholder running away.’”

But the real test was the next day.

On the morning of November 22nd, a self-media article titled ”Spark Major Shareholder Cashes Out 150 Billion, a Precursor to the Bursting of the Tech Stock Bubble?” went viral.

The article was written in a highly inflammatory way:

”Spark Technology’s stock price has broken through 3,900 rmb, with a market value of 4.3 trillion rmb and a P/E ratio of 28. Just as everyone was reveling, a mysterious shareholder cashed out 17.2 billion through block trading. This is just the beginning—according to insiders, the total scale of this round of stake reduction is as high as 150 billion.”

”What is the concept of 150 billion? It’s equivalent to the entire trading volume of the ChiNext board for half a year. Is Su Chen really going to run? Cashing out at the peak of market value and leaving retail investors stranded at the top?”

The article spread wildly on platforms like WeChat, the Chinese microblogging platform, and Xueqiu, with the number of reads exceeding 10 million in two hours.

At Spark headquarters, the alarm in the public opinion monitoring room went off.

Lin Wan immediately activated the emergency response plan. Half an hour later, Spark Technology’s official website released an announcement:

”Announcement Regarding Spark Trust’s Stake Reduction Plan and Use of Funds”

The announcement was very brief, but the amount of information was huge:

”In order to improve the company’s stock liquidity and promote reasonable price discovery, Spark Trust plans to reduce its holdings of the company’s shares by no more than 40 million shares within the next ten trading days, accounting for approximately 3.64% of the company’s total share capital.”

”The funds obtained from this stake reduction will be used for: establishing ’Star Capital,’ with a target scale of 100 billion rmb, focusing on high-tech industry investment and mergers and acquisitions; preparing to establish ’Star Artificial Intelligence Company,’ with an initial investment of 30 billion rmb; preparing to establish ’Star Robotics Company,’ with an initial investment of 20 billion rmb. The above funds will be used entirely for technological research and development and industrial investment and will not be transferred abroad.”

At the end of the announcement, it was specifically emphasized: ”The Spark Technology shares held personally by Mr. Su Chen will not be reduced within the next year.”

Twenty minutes after the announcement was released, CCTV Finance Channel urgently adjusted its program schedule, changing the 8:00 PM ”Financial Dialogue” to a live interview with Su Chen.

At 8:00 PM, Su Chen appeared on time in the CCTV studio.

The host, Dong Qian, opened with a sharp question: ”Mr. Su, today Spark announced a stake reduction of 150 billion. Some people online say you are going to cash out and run. What is your take on this?”

Su Chen smiled, his expression very calm: ”If I wanted to run, I would have run two years ago when Spark’s market value was only a few tens of billions; why wait until 4 trillion? If I had run then, it would have been worry-free and effortless, and I could have even earned the reputation of ’retiring after achieving success.’”

He paused, his expression becoming serious: ”First, one must have a clear conscience in what they do; second, money is enough as long as it’s sufficient; having more is a burden. To me, 150 billion is not wealth, but a responsibility—it is the fuel to take Spark to the next level.”

”Then how exactly will this money be used?” Dong Qian asked.

”It’s divided into three parts,” Su Chen said clearly. ”The first part, 100 billion to establish an M&A fund to acquire key technology companies in our supply chain. For example, semiconductor equipment, EDA software, and special materials. Relying solely on independent R&D in these fields is too slow; M&A can accelerate the process.”

”The second part, 30 billion invested in artificial intelligence. We have already assembled a team in Hangzhou with the goal of creating a world-class industrial large model. It’s not general AI, but vertical AI specifically for chip design, material R&D, and drug discovery.”

”The third part, 20 billion invested in robotics. Not toy robots, but industrial robots, surgical robots, humanoid robots, and special operation robots. For China’s manufacturing industry to upgrade, robotics is the key.”

Dong Qian pressed, ”When will these investments see returns?”

”Maybe three years, maybe five years, or maybe it will fail,” Su Chen said frankly. ”But that’s how tech investment is—if one out of ten projects succeeds, it’s worth it. If you don’t invest because you’re afraid of failure, you will never have a breakthrough.”

He said a final statement, which was later played repeatedly:

”Stocks can be sold, but dreams cannot. This 150 billion is selling stocks, but investing in dreams. I want to use this money to create the things China will need in five or ten years. If it succeeds by then, who will remember whether today’s stock price was 3,000 or 4,000? But if it fails, even if the stock price rises to 10,000, I will still feel that I have failed this era.”

After the interview was broadcast, the public opinion trend reversed completely.

Number one on the Chinese microblogging platform hot search: #Su Chen Dreams Cannot Be Sold#

Number one on Zhihu’s hot list: ”How to evaluate Su Chen’s statement: ’Stocks can be sold, dreams cannot’?”

In the stock forum, the comments from retail investors changed:

”So the stake reduction was to invest in the future; I misunderstood Mr. Su.”

”This is what an entrepreneur is, not a capitalist.”

”If I had Spark stock, I wouldn’t sell it either; I’d follow Mr. Su to invest in the future.”

The capital market voted with its feet.

On November 23rd, Spark Technology’s stock price rose instead of falling, closing at 3,980 rmb, an increase of 1.8%.

On November 24th, it broke through the 4,000 rmb mark, closing at 4,010 rmb.

Over the next five trading days, the stock price fluctuated within a narrow range between 3,950 and 4,050 rmb, and the average daily trading volume rebounded to 22 billion rmb.

Evan Chen’s team reduced their holdings daily according to the plan. By November 30th, they had cumulatively reduced their holdings by 38.5 million shares, with an average transaction price of 3,875 rmb and a total amount of 149.1 billion rmb.

”We reduced 1.5 million shares less than planned,” Evan Chen reported to Su Chen. ”Because the stock price was firm in the last two days, we voluntarily slowed down the pace to avoid impacting the market.”

Su Chen looked at the transaction report: ”How is the distribution of the buyers?”

”Very scattered,” Evan Chen pulled up the data. ”Over 50 institutions bought in, and the largest one only bought 1.2 million shares. The Social Security Fund increased its holdings from 0.8% to 1.2%, and foreign capital added 0.6% through QFII. Most importantly—”

He switched the chart: ”Market liquidity has improved significantly. The average daily trading volume rebounded from 8 billion to 22 billion, and the turnover rate increased from 0.05% to 0.12%. Although it is still on the low side, it has at least restored basic trading functions.”

Su Chen nodded: ”The biggest success is not just selling 150 billion, but that the market became healthier after the sale.”

Outside the window, the night in Shenzhen was bright with lights. This 100-billion-level stake reduction was like a delicate surgical operation, removing the liquidity tumor without causing a hemorrhage.

But the real surgery is only just beginning—150 billion in funds must be transformed into future competitiveness.