Soros sniping the Thai baht, leaving only endless pain to Thailand.
However, this financial gambler has greater ambitions!
July 1, 1997, Hong Kong returned to .
The next day, July 2, the four-month defense battle of Thai baht was declared unsuccessful, the Thai government was forced to abandon the fixed exchange rate system, and the Asian financial crisis began.
Then, the financial markets of Philippines , Malaysia , and Indonesia fell one after another, and Soros soared in Southeast Asia, plundering more than $10 billion in wealth.
Hong Kong is the Asian financial center. When Soros attacked Southeast Asia, Hong Kong was destined to become a decisive place.
In order to win Hong Kong, Soros made very careful arrangements in Hong Kong financial market one year in advance.
The first is to stockpile a large amount of Hong Kong dollars in the foreign exchange market. Soros raised more than 200 billion Hong Kong dollars through three methods: foreign exchange exchange, money market lending and bond issuance.
The second is to secretly buy Hang Seng Index components in the stock market, quickly pushing up Hang Seng Index ;
The third is to ambush huge amounts of stock index futures and foreign exchange futures short positions in the futures market;
The fourth is to constantly incite Hong Kong public opinion, return to the positive news in advance, and crazyly raise Hong Kong's housing prices and stock prices.
In August 1997, the exchange rate of in Southeast Asian countries collapsed in a mess, and the stock market and real estate markets fell terrible.
But at this time, the Hang Seng Index in Hong Kong miraculously reached the highest level of 16,820 points, and Hong Kong's housing prices also reached the highest level since its opening. The bigger the foam blows, the greater the power it will be when it finally explodes.
Soros burned the Hong Kong stock market and real estate market, while on the other hand, he stocked up -day chips to smash the market. hedge fund has completed its layout, and the battle clouds cover Hong Kong, and a shocking battle is about to break out.
Hong Kong, like Thailand, implements a link exchange rate system similar to a fixed exchange rate system. The exchange rate system of
is actually very simple. When issuing banknotes, a certain amount of US dollars must be deposited in a fixed proportion as foreign exchange reserves.
Three banknote issuing banks, namely HSBC , Standard Chartered Bank and Bank of China , for every HKD 7.8 issuance, it will be deposited USD 1 in the foreign exchange fund of the Hong Kong Monetary Authority.
If other banks want to receive Hong Kong dollar cash, they must exchange it at these three issuing banks according to the fixed ratio of 7.8 to 1.
Contact exchange rate system, every printed Hong Kong dollar has 100% US dollars as reserves. This exchange rate system looks as solid as a rock, so there is no need to worry about Soros' shorting .
But here is the weakest part of Hong Kong's financial system.
USD reserve guarantees only the issuance of Hong Kong dollars, while the issuance of Hong Kong dollars of issuance of Hong Kong dollars and the circulation of Hong Kong dollars are two completely different concepts.
Soros is the culmination of macro hedging strategies.
In the fierce battles sweeping across the pound, lira , THB, ruble , ruble , Soros summarized a set of offensive techniques that can be called textbooks - three-dimensional sniper theory. To summarize it in one sentence, the stock market, futures market and foreign exchange market bloom at multiple points, using the linkage between the markets to maximize the lethality of limited funds.
disassembled Soros' routine of attacking Hong Kong:
first sold a large number of Hong Kong dollars in the foreign exchange market, pretending to attack the foreign exchange market. When the exchange rate is under pressure and capital outflows, the first reaction of the Hong Kong Monetary Authority must be hikes . Because only by continuously raising interest rates and increasing the spread of the Hong Kong dollar and US dollar can we prevent capital outflows. But the side effect of interest rate hikes is that they will suppress the stock market. Since Hong Kong stock itself has accumulated a huge bubble, as long as HKMA raises interest rates, the stock market will fall.
Taking advantage of the negative news of interest rate hikes, he then shorted Hang Seng Index components in the stock market, suppressing the stock index and creating panic.
Once the stock market plummeted, had previously ambushed a huge number of short orders in the futures market, because futures has a super high leverage, and profits can easily be magnified dozens of times. If the stock market plummets, short orders that are ambushed in the futures market will make huge profits. After these three steps, Soros' funds in his hands increased exponentially, and then he could start from the first step and continue to sell Hong Kong dollars. The three-dimensional sniper theory of
is essentially a cycle. The panic in the market is getting heavier and heavier, and Soros's bargaining chips will accumulate more and more. When panic and Soros' chips accumulate to the critical point, under heavy pressure, -connected exchange rate will surely collapse.
. If the Hong Kong-related exchange rate falls, then the next thing is capital fleeing wildly and the Hong Kong dollar depreciates rapidly. In this way, Soros shorts the position of in the spot market, and the foreign exchange short orders ambushed in the futures market, he will make a lot of money.
At this time, Hong Kong became the next Thailand.
From God's perspective, Soros' attack on the foreign exchange market is just a feint. The real killer move is actually hidden in the stock market. If you want to defeat Soros, the focus of your defense cannot be on the foreign exchange market, but on the stock market.
As long as it can stabilize and even raise the Hang Seng Index, Soros' violent profits in stock index futures will turn into violent losses, and the entire hinge will be cut off. Unfortunately, it was too late to wait until the Hong Kong government understood!
1997 From October 21 to 23, taking advantage of the NTD hit a 10-year low. As panic in the Asian market intensified, Soros launched the first round of tentative attack on Hong Kong.
International speculators sold over HK$40 billion in the spot foreign exchange market for three consecutive trading days.
The Hong Kong government was forced to fight, and the battle to defend Hong Kong's financial situation officially began.
Ren Zhigang, who was the president of the HKMA at the time, chose to respond with the strategy of "pulling up interest rates and drawing high interest rates". While using foreign exchange reserves to take over the Hong Kong dollar sold by speculators, the HKMA also tightened monetary policy , which raised the lending rate in the interbank market. And this happened to fall into Soros' trap!
After the HKMA raised interest rates, Soros turned from the foreign exchange market to the stock market, shorting the Hang Seng Index stocks, and the Hang Seng Index plummeted from 15,120 points to 9,040 points, down 40% within one month.
Soros won the first battle, and international speculators made billions of Hong Kong dollars in stock index futures at one time.
Soros, who was full of confidence, used the same method to shorten HK$30 billion and HK$7.8 billion in the foreign exchange market respectively in January and June 1998.
The HKMA was forced to raise interest rates again, announcing that it would no longer adopt the official discount rate of 6.25%, but should adjust the supply of funds at a punitive rate according to the situation.
This move directly led to the surge in Hong Kong interbank interest rates to 300%. Interest rates soared, and Hong Kong stocks followed twice with big plunges.
Panishment in the financial market spreads, and Western public opinion even joked that Hong Kong has become Soros' ATM.
Due to the first three test attacks, the Hong Kong government had no power to resist, so Soros judged that the time to launch the general attack was ripe, and he decided to concentrate his firepower and take Hong Kong in one fell swoop.
From August 5 to 7, 1998, international speculators launched a fierce attack on the Hong Kong foreign exchange market, and the Hong Kong dollar and Hong Kong stocks suffered a large sell-off, and the Hang Seng Index continued to plummet.
August 13, this day was the darkest moment in Hong Kong's financial history. The Hang Seng Index has shrunk by 63%, and housing prices have also fallen by more than 50%. Hong Kong is facing the most severe test since its establishment.
Hong Kong seems to be "the trend is over".
If the Hong Kong government does not take effective measures, the Hang Seng Index will soon fall to 4,000 points, and the Hong Kong financial system may collapse within 5 days.
At this time, if you give up the contact exchange rate, it is actually giving up resistance. As long as the Hong Kong government gives up the fixed exchange between the Hong Kong dollar and the US dollar, capital outflow will be out of control, the Hong Kong dollar will depreciate wildly, the stock market and the real estate market will plummet, and Hong Kong will become the second Thailand.
has another dangerous move, which is to use foreign exchange reserves to enter the market and make a desperate attempt with international speculators. Whether
is a war or a decline, this choice is of great importance.
Tang Yinquan and Ren Zhigang are under great pressure, but they are both very clear that they must surrender without fighting.
The two quickly reached a consensus and made a decision that would be recorded in history: "The government enters the market, calls for foreign exchange reserves, and give it a try." (It is said that on the night the decision was passed, Tsang Ying-quan cried all night.)
and Tung Chee-hwa decisively agreed to their plan.
The Hong Kong government dared to stick to the exchange rate, and its outcome was positive with international speculators. One important reason is that the senior financial officials of the Hong Kong government had previously secretly entered Beijing and received the promise that " will provide reserves to help fight speculators as long as Hong Kong needs it."
August 14, Hong Kong, which is united in the whole world, sounded the clarion call for the Jedi counterattack.
The SAR government gave up its blindly increasing interest rates and began a comprehensive confrontation between stock markets, foreign exchange markets and international speculators.
In the foreign exchange market, the Hong Kong government took over the Hong Kong dollar seller of international speculators.
In the stock market, the Hong Kong government uses foreign exchange funds and land funds to buy 33 components of the Hang Seng Index without asking for price.
In addition, Chinese and Hong Kong-funded enterprises also joined the battle group at this time. 24 listed companies of blue chip and red chip also repurchased stocks in the market, jointly raising the stock price.
htmlOn August 14, the Hang Seng Index hit its largest single-day increase in six years, and re-established the integer mark of 7,000 points.The Hong Kong government's sudden combination of punches surprised international hot money , but the battle-hardened giants quickly stabilized their positions.
has no turning back. Soros and the Hong Kong government are very clear that once the two sides fight, they will almost never stop.
Because international speculators hold a lot of Hang Seng Index August futures contracts in their hands, the expiration date of the August contract is August 28.
This means that the result of this life-and-death showdown will be announced 14 days later, that is, the expiration date of the Hang Seng Index futures.
A few days later, the Hong Kong government and Soros were close contact in the stock market, foreign exchange market and futures market. International speculators bombarded the market with all their might, while the Hong Kong government took over the huge selling price, without giving in.
Hang Seng Index stopped its crazy decline and turned into a state of volatile. The date of the final battle is getting closer and international speculators are getting more and more crazy.
After initially stabilizing the stock market, the Hong Kong government moved to the futures market with huge capital.
Because of feeling the determination of the Hong Kong government to the end of the bloody battle, some international speculators want to avoid the edge and move their August contracts to September in order to fight a protracted war.
htmlOn August 24, the Hong Kong government took the initiative and shorted about 40,000 September contracts, and the September contract price was hit to 7,200 points.Because the average position building price of speculators on August contracts is 7,500 points, which means that if speculators want to move positions in September, they must bear 300 points of loss on each contract.
Under the siege of the Hong Kong government, the retreat of international speculators was blocked, and most stock index futures contracts were left in August, and only about 10,000 contracts were transferred to September.
August 27, the day before the final battle, the global stock market atmosphere was extremely poor, and the stock markets in the United States, Europe and Asia fell sharply across the board.
Hong Kong stock trading volume has remained high throughout the day. In the 15 minutes before the closing, the battle became even more intense, and the transaction volume soared to an amazing 8.2 billion Hong Kong dollars.
International speculators bombed one after another throughout the day, while the SAR government took a decisive battle, spending a total of HK$20 billion to catch the speculators' orders.
As of the close of the 27th, the Hang Seng Index rose 88 points to close at 7922 points. On the eve of the final battle of
, all Hong Kong people had almost no sleep all night!
htmlOn August 28, the whole world turned its attention to Hong Kong.
At 10 am, the stock market opened , and the decisive battle started on time. As the peripheral market continued to deteriorate, in addition to international speculators who were crazy about the market, many foreign banks also joined the battle and shorted a lot.
sell-offs surged out like a rush, and the Hong Kong government turned the tide alone in the stock market with its own strength.
Every minute, the Hong Kong government has to eat HK$600 million in stocks. Shortly after the opening, the trading volume has soared to HK$10 billion.
The long and short sides repeatedly competed for the Hang Seng Index. Although international speculators were all trying their best to ship, the Hong Kong government accepted all the orders no matter how much speculators sold. Throughout the morning, the Hang Seng Index was nailed to around 7,800 points.
As soon as the market opened in the afternoon, international speculators who were forced into the corner frantically counterattacked. They knew that this was the last chance to turn the tables.
bears once broke through the defense line, instantly lowering the Hang Seng Index by 300 points.
The Hong Kong government mobilized funds and increased its buying efforts. The Hang Seng Index quickly stopped the decline and quickly recovered 318 points, returning to the 7800 point line.
The stock market transaction amount that day reached HK$79 billion, setting the highest single-day transaction record in the Hong Kong market, about 10 times the usual trading volume.
At 4 pm, the closing bell rang on time, and the Hang Seng Index and Futures Index that were constantly jumping on the display were locked at 7829 points and 7851 points respectively.
A shocking battle has come to an end, and international speculators led by Soros' attempt to short Hong Kong completely went bankrupt.
From the Hong Kong government decided to enter the market to intervene on August 14, the stock market closed on August 28. In just 10 trading days, the SAR government used about HK$120 billion in foreign exchange reserves, pushing the Hang Seng Index up 1,169 points.
This battle of the Hong Kong government has preserved the dignity of Hong Kong people!
Soros has gone out of the way and he returned in a defeat.
Although international speculators are still fighting and want to move back to the war in September, on September 7, the Hong Kong Financial Authority issued new regulations on foreign exchange, securities trading and settlement, which greatly restricted speculators' speculation. On that day, the Hang Seng Index soared by 588 points, reaching the 8,000 point mark. The losses of international speculators have further intensified, and they eventually have to retreat from Hong Kong.
For Soros, Hong Kong and China are his sad place!
With the strong support of the central government , although Hong Kong "winds miserably" in this financial defense battle, it also prevents Hong Kong from "a ruin", which has also become the "first show" of the Chinese government's participation in the world financial war.
References:
1, China Economic Weekly - Hong Kong Financial Defense War: Hong Kong Government Fight against Soros;
2, Business School Magazine - Complete Record of Soros' bloody battle in Hong Kong in 1998.
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