Chapter 72: The Yen Depreciates
After Tang Caidie left, Lu Liang turned on his computer to browse the day’s financial news from around the globe.
He only glanced at the domestic stock market—it was another straight plunge. Retail investors were suffering massive losses, oscillating between cursing and praying for intervention from Xiao, the regulator they had once denounced.
Zhongxin Fuying and 12 Futian Road were ruthlessly dumping shares every day. Over ten billion had already been sold, with no signs of stopping.
Stock prices had plummeted from 48.25 yuan, dropping three consecutive limit-downs to 35.19 yuan, incurring a net loss of 1,306 yuan per lot.
Retail investors’ meager profits had been wiped out, leaving them worse off as they were bled dry by the relentless sell-offs.
What made it worse was that these bottom-level dumps prevented even those wanting to cut their losses from selling out.
"Just endure a bit longer—two more days at most," Lu Liang muttered to himself.
He was also losing millions daily, but having made significant prior gains, he remained unfazed.
Soon, however, his attention was drawn to news from Japan.It was a significant update: Japan’s cabinet had called an emergency meeting, hinting at an increase in the consumption tax.
"With an aging population and declining birth rate, a depleted treasury makes raising the consumption tax an inevitable choice," Lu Liang mused.
He pulled up a chart of Japan’s consumption tax hikes over the past 20 years, pondering its implications.
Once, Japan had boldly declared plans to sell off Tokyo and buy America, only to be severely crushed by the U.S.
Since then, its economy had stagnated for over two decades. Prices and taxes rose incessantly—everything except wages.
The last time the consumption tax increased, from 3% to 5%, was in 1997 when the Thai baht’s collapse triggered a financial crisis that swept across Asia.
"Eighteen years without a hike—will they raise it now?"
Lu Liang considered the possibilities. If they did, it would definitely be bearish for the yen, creating an opportunity to short it.
If not, it would benefit the yen, and shorting would pit him against the market.
After analyzing historical data, Lu Liang pulled up the yen-to-dollar exchange rates from the past few years and suddenly chuckled.
Four years ago, a natural disaster and a man-made crisis had opened the floodgates for the yen’s decline.
Back then, one U.S. dollar was worth 79 yen. Now, it was worth 108 yen.
For a national currency, a 37.5% devaluation over four years was catastrophic.
It was akin to someone earning 3,000 yuan a month.
Four years ago, a bottle of soda cost 3 yuan; now, it cost 4.12 yuan.
Previously, they could buy 1,000 bottles; now, only 728.
The cost of producing the soda hadn’t changed. The 272 bottles that “disappeared” were the result of currency devaluation—a clear sign of inflation.
After careful thought, Lu Liang decided to go for it.
The yen’s depreciation was an irreversible trend. While disasters and crises acted as triggers, the real cause lay in Japan’s aging and shrinking population.
Children were the foundation of any economy. From conception to college graduation, at least 20 years of expenditure without revenue were required—stimulating countless industries along the way.
In contrast, the elderly, with their houses, cars, pensions, and medical insurance, had limited consumption needs, even failing to boost service industries like bathhouses.
Even if the consumption tax wasn’t increased, shorting the yen would at worst result in minor losses—not enough to trigger a margin call.
With 145 million yuan in his account, leaving such a large sum idle was wasteful. He decided to use $10 million for the trade. If it failed, he could offset the loss with his gains from Teli A.
Lu Liang began gathering information, starting with forex trading rules and the schedule for Japan’s next cabinet meeting.
Forex trading was similar to stock and gold markets—sell high and buy low.
At the current rate of 108 yen to the dollar, $10 million would exchange for 1.08 billion yen without leverage.
In forex trading, each point rise in the yen-to-dollar rate would yield 10 million yen in profit, equivalent to $92,500.
With leverage, the stakes would increase tenfold: at 10x leverage, one point would net 100 million yen; at 100x, it would soar to 1 billion.
Conversely, at 100x leverage, a one-point drop would result in a 1-billion-yen loss, potentially triggering a margin call if losses exceeded 70% of the margin.
Leverage fees varied widely, from 50x to 400x, with transaction fees ranging between 0.06% and 0.1%.
The next cabinet meeting was scheduled for the following Tuesday. The government would gather public opinion before finalizing whether—and by how much—the consumption tax would rise.
Lu Liang spent the rest of the morning analyzing these matters, skipping lunch until Tang Caidie called him to view the company’s new office space.
Accompanied by Chen Jinchun, he visited several prominent buildings in the Lujiazui Financial District, including the World Financial Center and New International Tower.
The base rent of 8 yuan per square meter was just the starting point—prices of 9, 11, or even 15 yuan per square meter were not uncommon.
Lu Liang took a liking to New International Tower near the Greenland area, situated in the heart of Lujiazui and just a three-minute walk from the subway.
The 32nd floor of the 45-story building offered a usable area of 3,800 square meters, with a daily rent of 9.5 yuan per square meter.
Though the floor was high, the building was equipped with 38 high-speed German elevators, ensuring smooth operation.
“This one will do,” Lu Liang declared while munching on the hamburger Chen Jinchun had just bought him.
It boasted a prime riverside view, overlooking the Bund and Pearl Tower, with nearby banks like Bank of China, Ping An, and Hang Seng, making future business dealings convenient.
The property manager, elated, said with a beaming smile, “Mr. Lu, after discounts, the monthly rent is 1.05 million yuan.”
“Tang Jie, I’ll leave this to you. I have other matters to attend to,” Lu Liang said with a smile, glancing at the time. He had promised to pick up Su Wanyu for English lessons that afternoon, signaling to Tang Caidie to negotiate further.
Luxury office rentals had significant room for negotiation. For large spaces like theirs, discounts of 20-30% weren’t unusual.
The original rent of 1.083 million could likely be negotiated down to around 900,000 yuan. After all, property fees were separate, costing 28 yuan per square meter monthly—another annual expense of over a million.
Understanding the implication, Tang Caidie asked, “What about Xiao Chen? Should she accompany you?”
“She’s staying with you,” Lu Liang said, discarding his hamburger wrapper and sipping his soda as he strolled to the underground parking lot.
In casual attire, he stood in stark contrast to the suited businesspeople around him.
Once in his car, Lu Liang called Su Wanyu. “Are you still at home?”
“Uh… yeah,” she replied.
“I’ll be there in 30 minutes.”
Half an hour later, at Hongfa Apartments in Guangzhong Fifth Village, Su Wanyu stood at the door with her crutch.
Pulling up beside her, Lu Liang joked, “Do you need me to get out and open the door for you?”
Ever since their relationship had blurred beyond employer and employee, Su Wanyu seemed naturally dazed and a step behind whenever she interacted with him.
Hopping over to the passenger seat, she stowed her crutch and softly said, “I’d like to request a few days off.”
Visit and read more novel to help us update chapter quickly. Thank you so much!
Use arrow keys (or A / D) to PREV/NEXT chapter