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Shirley Yam

Accumulators - now more well known as 'I'll kill you later' - have hurt some of the wealthiest people in our community. Just what were they thinking when they essentially flushed their cash down the toilet and do they deserve our sympathy or derision? Based on a number of interviews with bankers and insiders, I think I have managed to get inside the head of one such investor.
'Ihave lost HK$200 million and a large piece of my business in accumulators.
I know what you think. Only fools would pour their money into a contract that offers limited upside but unlimited downside, right?
But I am no fool.
Together with my college friends, I have built from scratch an enterprise that leads the industry. It was all done within a dozen  years. Trust me, in China's business jungle, it took more than just luck.
Early last year, we  even managed to get our Hong Kong listing. Overnight, we became billionaires. Watching the market pushing our firm to valuations that rivalled the blue chips was like magic.
In November 2007,  the private bankers entered  our beautiful world with their pretty Chanel suits, shiny diamond rings, sweet voices and a dazzling list of investment proposals. They are part of the investment bank's one-stop-shopping service - pre-IPO investment, public listing and then wealth management for the major shareholders.
Accumulator contracts were top of the list. They called it an unbeatable opportunity to stock up on blue chips, like HSBC Holdings, China Mobile and China Life Insurance. For every trading day within a year, I would buy a committed number of shares.
Most important of all, they came at a 30 per cent discount to the market price of the day I sign the contract.  And I didn't even have to pay in full. For a US$1million contract, a US$300,000 cash or share deposit would suffice.
I had heard of this before, in dining rooms, cocktail parties and on the golf green. Almost everybody with some money was talking about it. If you were not, you are either not rich or smart enough.
The eyelash fluttering girls from the banks named a list of people that were already in. It was a Who's Who list of the city's powerful - the tycoons, their wives and their sons. It felt good to know I was in the same loop with them.
But life has trained me not to trust any banker. Sensing my hesitation, one of the girls quickly added, 'Of course, there was a risk that you will be buying stocks at above the market price. But here we are talking about HSBC and China Mobile. They are as good as gold in the long run.'
She was right. If someone offered me China Mobile at below HK$100, I would immediately jump on it. Remember the stock once traded at HK$158. Besides, the market had already corrected from its 31,638-point peak.
I signed a US$2 million contract. I admitted I did not read the fine print.
But I am not betting too much. It's not even a decimal point of the fortune  the bull market  showered on me. But I played safe. I am not a cowboy like many of my fellow countrymen who bet on accumulators on new but sexy stocks, like Alibaba, a portal that had traded for less than a year.
A week later, the banker called with goods news. As the market rebounded, the stock has risen  3 per cent and hit the strike-out price. I pocketed the 30 per cent discount of the shares that I've accumulated that week. It's small but still a windfall.
Winning tastes good so I increased my bet. There were days where the shares would go under  water but quickly recover as the market zigzagged.
The big day came in spring. By late April, accumulators had already brought me a handsome profit following the 20 per cent market rebound. I  decided to go big this time. To get the ammunition, I sold some of the holding in my firm as the IPO lock-up period expired.
By then, the press was full of horror tales about accumulators, nicknamed 'I'll kill you later' by some. I read about it. But these were losers talking. They lost because their pockets were not deep enough. When the market fell and the margin calls came, they were toast.
It was a different story for someone like me. I was sitting on HK$300 million in cash and a business that was still worth tens of billions despite the correction. I could sit through the darkness until the sun rose.
It was true that Beijing was trying to cool down the overheated economy. But this rhetoric comes and goes every few years.
It was true that the subprime problem was still lingering in America. But China's economy was big and strong enough to decouple not just itself but the rest of Asia from the trouble across the Pacific Ocean.
It may  get darker before dawn but the market had already corrected over  25 per cent from the peak. Also, don't forget there was a 30 per cent price cushion in the accumulator.
I was not alone. New bets on accumulators were made even in July when the big market shakeout began.
But who would have expected Henry Paulson to let go of Lehman Brothers? We don't let banks go bust in China. Who would have expected it to ignite a massive deleveraging by funds and banks that turned into an unprecedented death spiral?
In the last two weeks of September, my beloved blue chips dived more than 30 per cent. Gone was the price cushion.
The pretty bankers were after me. They phoned. They send SMS. They asked for HK$200 million, partly to top up my margin and the rest to pay for the committed daily intake of shares.
I had only three days to find the money!
If not, they would dump the blue chips accumulated in my account and ask for the immediate payment of the rest of the stocks that I had committed to buy.
I had no choice but to sell stakes in my firm. I dumped HK$220 million worth of shares in early October. Then, as the price went further south, a further HK$320 million worth of shares was gone  10 days later. By late October, I parted with an additional HK$350 million more of shares. All sold at fire-sale prices. It was painful.
There are four more months to go before my contracts expire. I am negotiating a settlement with my banks. A tycoon recently got a pay-by-instalment settlement. Another's son has successfully cut down his charge by half.
No matter what, a large piece of my fortune is gone. Just don't add salt to my wounds by calling me a fool. I am just unlucky.'



Fortune gone but, really, it was just bad luck