In 1993, Hong Kong television channel TVB premiered The Greed of Man, a 40-episode drama about a villainous fellow named Ding Hai who beat his best friend to death, touched off a murderous family vendetta, unexpectedly made a fortune in the stock market, and was eventually undone after he bet against the market and was thrown off of the stock exchange roof by the gangsters who financed his portfolio. It's a bit like Gordon Gekko meets Richard III.
This stock market melodrama, while popular in Hong Kong, might have passed into global obscurity had the actual Hang Seng index not crashed by some 2,600 points during the show's initial run. At first, this seemed like a weird coincidence, a case of life imitating art. But then a funny thing happened.
Adam Cheng, the actor who played Ding Hai, starred in a new TVB series in 1994 called Instinct, a love story involving business executives. This smash hit was not specifically about the stock market, yet during its initial run, the Hang Seng dropped by about 2,000 points. In 1996, Cheng starred in Once Upon a Time in Shanghai, and the Hang Seng fell 300 points. In 1997, Cheng starred in Cold Blood, Warm Heart and the market dropped 735 points. Later that year, he starred in the martial arts epic Legend of Yung Ching, and the Asian financial crisis started soon thereafter, in which the Hang Seng plummeted more than 5,000 points.
Since the premiere of The Greed of Man, virtually every time Adam Cheng has starred in a new TV show, the Hang Seng has tanked in what has now become known among traders as the "Ding Hai Effect." Supposedly, Credit Lyonnais has written a report on it, even going so far as to tally the total damage Cheng's acting has cost the market. Cheng himself is only too aware of the effect his work has created. One disgruntled investor tried to sue Cheng for HK$1 million to recoup his investment losses following one of Cheng's premieres.
Others have pelted the otherwise beloved actor with eggs following separate stock market crashes. On a few occasions, he reportedly lost work from studios that refused to cast him because they did not want to be associated with resulting stock crashes. But if there really is anything to the Ding Hai Effect, Cheng himself must not believe in it, because in 2000, he starred in a re-make of The Greed of Man called Divine Retribution. With a name like that and a history like Cheng's, even a skeptic might not be criticized for selling off on premiere week.
But is there really any truth to this stuff? How can one actor's role in a show affect something as vast and complex as a financial market? According to some traders, the Ding Hai Effect is nothing more than a superstitious feedback loop. Some people really think that a new Adam Cheng show will mysteriously tank the stock market, so they take pre-emptive action by selling off before the crash. This, of course, touches off an actual crash, making the Ding Hai Effect a self-fulfilling prophecy. If that is the case, then the Ding Hai Effect is indeed a real thing, not because of some weird quality of Adam Cheng television shows, but because people can be strange and panicky herd animals-especially when financial investments are involved.
What the Ding Hai Effect illustrates more than anything else is our desire to manage risks that, to some extent, cannot be managed. It's no secret that for all of their expertise, the picks of stock market gurus can be matched or even outperformed by stocks chosen at random. An investor friend of mine once described stock trading as like having a drunken knife fight in the dark; you flail about in hopes of scoring a hit while not getting hurt in the process. Facing those kinds of odds, it's no wonder the financial world will look to anything for clues.
In the meantime, dear traders, take heart. Cheng's career seems to be slowing down a bit, now that he's in his sixties. Still, last December, he appeared on the Chinese version of Deal or No Deal, and the Hang Seng dropped 341 points the next day. Cheng himself did poorly on the show, making a mediocre HK$10,000 off of it, so perhaps what goes around comes around.
We'll know for sure if he ever becomes the host of a Chinese version of Fast Money and the global markets go into meltdown while he makes stock picks from a fortified and undisclosed location. Now that would be a show worth watching.
Bill Coffin is publisher and editorial director of Risk Management.
