On July 1, 1997, the five-star red flag rose over the Hong Kong Special Administrative Region.
After a hundred years, Hong Kong has finally returned to the embrace of the motherland.
However, just as the whole country celebrates Hong Kong's return to and is in full joy, international capital has secretly gathered its army and quietly pressed towards Hong Kong.
Before this, a long-planned financial storm swept across Southeast Asia.
July 2, 1997, the day after Hong Kong's return, Thailand was the first to be defeated in this financial storm.
Under the fierce attack of international capital, the Bank of Thailand was forced to announce that it would abandon the fixed exchange rate system, and the Thai baht exchange rate against the US dollar fell by 20% on the same day.
The battle to defend the Thai baht lasted for 4 months was completely declared a failure!
Thai baht depreciated sharply like a huge rock hitting water, causing huge waves in the entire Southeast Asian financial market.
Following Thailand, the Philippines, Indonesian , Malaysia fell one after another, and the currencies of various countries were pouring out like water opening the gate, and Indonesian rupiah depreciated to the lowest point in history.
At that time, the Prime Minister of Malaysia cursed the famous financial tycoon by name:
"This guy came to our country and overnight, the struggle of the people of our country has gone into vain for more than ten years."
The crisis was raging in Southeast Asia, but Hong Kong at that time did not realize the approaching of the danger.
At this time, the bull market in the Hong Kong stock market has lasted for a full two and a half years.
Hang Seng Index has a low of about 6,900 points in early 1995, and in August 1997, it reached a high of 16,820 points, a sharp rise of 144%.
However, after international capital launched an attack, in just two months, the Hang Seng Index fell below 9,000 points.
Then, the target of international short began to turn to the Hong Kong dollar and futures market , speculating heavily, and arrogantly called Hong Kong "super cash machine"!
After Southeast Asia, Hong Kong's financial market will also be slaughtered.
At a critical moment, the Hong Kong government entered the market and the central government strongly supported it. The thrilling Hong Kong financial defense battle started.
This article refers to a large number of books, academic research and media reports on the Hong Kong financial defense war to completely restore the Hong Kong financial defense war. If you are interested in which financial wars in history, please leave a message in the comment area. The more likes, the faster the updates are.
1 Killing
Time went back to 1995, while international capital was planning to Southeast Asia, it began to secretly purchase Hong Kong stocks.
With the help of international capital, Hong Kong stock has been rising from its low point in 1995 and has repeatedly set new highs.
Hang Seng China Enterprise Index rose from 993 points in early July 1997 to 1,727 points at the end of August. In just two months, it soared by 73%, and there was an irrational speculation boom in the stock market.
The purpose of international capital is obvious:
is to first hype the stock price to the peak before Hong Kong returns. After Hong Kong returns, using the plunge can not only make huge profits, but also create bad political influence.
In addition to the stock market, international capital also secretly hoarded Hong Kong dollars to prepare for the subsequent impact on the Hong Kong dollar exchange rate.
However, Hong Kong was still full of peace.
Some scholars analyzed that the main goal of international speculators is Southeast Asia and they dare not get close to Hong Kong.
gwy Policy Research Office also sent an official delegation to visit several Southeast Asian countries with the worst crisis at that time. The visiting regions did not include Hong Kong:
Because no one expected that the situation in Hong Kong would become so serious in the future.
On July 12, 1997, on the day the Philippines fell in Thailand, some "straight soldiers" began to harass the Hong Kong dollar on a small scale. The Hong Kong Monetary Authority used US$1 billion to fight back, and the situation quickly returned to peace.
In August 1997, after sweeping Southeast Asia, international capital turned north and launched its first wave of attack on Hong Kong with a fierce momentum.
August 15 and 16, a week after the Hang Seng Index reached its highest point, international speculators concentrated on selling HK$4 billion in two days.
August 15th, under the sudden impact, the Hong Kong dollar exchange rate once reached the warning line of HK$7.75 against USD, and the Hang Seng Index fell 400 points, a drop of 2.43%.
However, due to the small scale of the sniping against the Hong Kong dollar this time, the Hong Kong Monetary Authority resolved the crisis by selling the US dollar in the market, absorbing the Hong Kong dollar, and raising interest rates.
Although the first wave of tentative attacks by international speculators ended in failure, the bloodthirsty capital, which has tasted the sweetness in Southeast Asia, will not give up so easily.
While releasing smoke bombs, they secretly accumulate strength and prepare to launch a three-dimensional attack on the Hong Kong stock market and foreign exchange market !
2 Strong attack
In September 1997, after more than two months of fluctuations, the Southeast Asian financial market finally had a chance to breathe. The stock market and exchange rate rebounded one after another, and it seemed that was about to rain and clear the sky .
HTM0On September 17, the annual meeting of World Bank and the International Fund Monetary Organization was held in Hong Kong.
The views of the governors of various countries' central banks are surprisingly consistent: the Southeast Asian crisis is about to end.
International capital took the opportunity to shine, claiming that Hong Kong's economy is stable and the Hong Kong dollar exchange rate is reasonable.
When asked by China whether it would snipe the Hong Kong dollar, the international financial tycoon answered firmly:
dare not, or dare.
But behind the scenes, international capital has been actively preparing for the war, just waiting for the best opportunity to start the war.
By October 1997, the Southeast Asian market began to decline again.
On October 17, NTD gave up the exchange rate of NTD 28.48 that he had been sticking to and turned to a free floating rate, and in just a few days it plummeted to a 10-year low of NTD 30.7 NTD 1 against the US dollar.
The global financial market was once again shrouded in panic, and international capital took the opportunity to launch a fierce attack on Hong Kong.
International capital is creating a big news that the Hong Kong dollar will depreciate, and at the same time, it sells out a large number of Hong Kong dollars.
October 21 to 23, in just three days, international capital sold HK$100 billion, an unprecedented scale.
day-to-day volume sales, many long-term investors' confidence in the Hong Kong exchange rate system has also shaken, joining the ranks of selling Hong Kong dollar and Hong Kong stocks, with the Hong Kong dollar exchange rate approaching the bottom line of 7.75 Hong Kong dollar against 1 US dollar.
Hong Kong dollar exchange rate fell rapidly, and there were runs in front of major banks.
It needs to be explained here that most of us usually buy first in investment, and then make money through rising. So how does international capital make money through falling?
One minute to explain briefly, the principle of international capital making profits through the decline of the Hong Kong dollar ( shorting ) is similar to that of the stock market.
Assuming that the exchange rate of the Hong Kong dollar against the US dollar is 10:1, international capital will lend a loan of HK$10 billion to the bank, and sell it at a 10:1 exchange rate and get 1 billion US dollars.
If they sell the Hong Kong dollar, the Hong Kong dollar exchange rate will depreciate to HK$20 against USD. At this time, to repay the 10 billion Hong Kong dollar loan, and to purchase 10 billion Hong Kong dollars at the current 20:1 exchange rate, it only takes 100/20, that is, 500 million USD.
was sold for $1 billion before, but now it spends $500 million to repay the loan. Regardless of interest and handling fees, it makes a net profit of $500 million in one round. This is exactly the wishful thinking of international capital.
or above is just a way for international capital to make profits by short selling. They can also use to leverage in the futures market, and make a big move.
can leverage $1 billion in funds with just $100 million, and the final return rate will also be 10 times larger.
On the contrary, if international capital fails to suppress the price of Hong Kong dollar and Hong Kong stocks, the price will rise instead of falling, and international capital will lose all its money.
International capital sold Hong Kong dollars frantically, and the HKMA had no choice but to enter the market again to intervene and absorb a large amount of Hong Kong dollars.
However, this time, international capital is actually making a fuss:
sells Hong Kong dollars, just a cover!
They attacked the Hong Kong dollar on the surface, but their real goal was actually the stock market.
This is also the reason why the "three-dimensional offense" mentioned earlier.
Because international capital borrowed a large amount of Hong Kong dollars and then sold it, in order to increase the cost of international speculators borrowing Hong Kong dollars, Ren Zhigang, then president of the Hong Kong Monetary Authority, initially chose to tighten loans and significantly "raising interest rates" to deal with it. He used punitive interest rates for banks with excessive borrowing. This decision caused the interbank market interest rate to soar to 300%. This move before
has worked repeatedly when it was used to deal with international speculators, and Ren Zhigang was awarded the title: "Every move".
But this time, while international capital sold the Hong Kong dollar, it was also selling a large number of stocks it had previously hoarded.
Although tightening loans is conducive to the stability of the Hong Kong dollar exchange rate, interest rates have risen sharply, which is not conducive to economic recovery. At the same time, it will cause outflows of funds in the stock market and cause panic in the stock market.
plus international capital spread negative news, selling stocks in large quantities, causing further panic in the market and the Hong Kong stock market began to plummet.
On October 28, the Hang Seng Index plummeted by more than 1,400 points, setting a historical record.
From October 20 to October 28, in one week, the Hang Seng Index plummeted 33%, down more than 4,400 points.
, and international capital has already shorted Hang Seng Index Futures in advance. The price of Hang Seng Index Futures is the Hang Seng Index point multiplied by HK$50 on the day. For every 1 point lower of the Hang Seng Index, international capital can make HK$50, and 4,400 points is HK$220,000. If international capital has 10,000 shares of Hang Seng Index futures, the return is HK$2.2 billion.
Hong Kong stock market value fell from US$200 billion on July 3 to only US$100 billion on October 28, a full drop of half.
Although Hong Kong has held the exchange rate, international capital has made more money back in the stock market and futures market.
It can be said that international capital has robbed Hong Kong's economic achievements for decades of hard work just by tapping the keyboard!
3 Total attack
Under the ruthless attack of state-owned capital, Hong Kong is in a dilemma:
protects the Hong Kong dollar, and the soaring interest rates will cause the stock market to suffer;
protects the stock market, and the Hong Kong dollar may not be able to withstand the attack and depreciate significantly, and the consequences are also unimaginable!
and international capital also realized the difficult situation Hong Kong faced, and used the same trick twice in January and May 1998.
International Capital even declared arrogantly:
Hong Kong stock market and foreign exchange market have become their super cash machines. If you are short of money, you only need to go to this cash machine to press a few buttons!
Faced with international capital that has made a tough deal, Hong Kong has made an important decision that will be recorded in history forever:
Let it go, and both the exchange rate and the stock market must be kept!
In the first half of 1998, international capital once again secretly hoarded a large number of stocks and Hong Kong dollars, preparing to wait for an opportunity to defeat Hong Kong in one fell swoop.
8 In August, international capital finally waited for an excellent offensive opportunity.
At that time, Russia was in financial turmoil, Indonesian crisis continued, the Japanese yen exchange rate continued to fall, while Hong Kong's own interest rate remained high, the economy paid a high price, and the stock market and the real estate market both fell by more than 50%...
In this case, international capital took the opportunity to spread negative news wildly, proclaiming that the RMB would depreciate significantly by 10%. Shanghai's foreign exchange black market rekindled, and the black market exchange rate fell to 1 US dollar against 9.2 RMB, nearly 9% lower than the official exchange rate!
Facts have proved that this is another "speaking the world" by international capital.
htmlOn August 5, under the cover of various smoke bombs, international capital sounded the clarion call of the general attack and launched a large-scale attack on the Hong Kong foreign exchange market, stock market and futures market.
summarizes the lessons of the previous hike of Hong Kong to raise the cost of Hong Kong dollar loans. International capital borrowed a large amount of Hong Kong dollars in advance before launching an attack. even if Hong Kong raises interest rates, it will be useless, because they already have enough ammunition in their hands. Raising interest rates will only impact the Hong Kong stock market again!
However, this time, the Hong Kong government also took a completely different response measures, caught international capital off guard.
In the past, the HKMA had used to increase interest rates to absorb Hong Kong dollars;
This time, the interest rate was not raised, but instead used the Hong Kong government's foreign currency fiscal reserves to absorb all the Hong Kong dollars.
htmlOn August 5, international capital sold more than 20 billion Hong Kong dollars, and another more than 20 billion Hong Kong dollars on the 6th. However, no matter how many Hong Kong dollars are in the market, the Hong Kong government absorbed them as much, and the Hong Kong government deposited the recovered Hong Kong dollars back to the banking system, and interest rates did not rise significantly, which in turn increased the difficulty of international capital suppressing the stock market, which disappointed international capital.
International Capital did not get any benefits at HK$4, but in the stock market, due to the crazy selling of international capital, on August 7, Hang Seng Index fell to 7,000 points.
You should know that on August 7, a year ago, the Hang Seng Index was at an all-time high of 16820 points.
Home 0A year has passed, and the Hang Seng Index has fallen by nearly 60%!
A few days after that, international capital continued to strengthen its suppression of the stock market. From August 3 to August 13, in just 10 days, the Hang Seng Index plummeted by more than 1,100 points, reaching the Hong Kong economic warning line of 6,600 points!
Hong Kong's real estate market has also suffered a heavy blow, returning to the level 10 years ago.
Home buyers around the peak housing prices in 1997 lost all their money. Due to the hopelessness of repaying the loan, many people embarked on the road of no return.
According to statistics, in this crisis, the wealth of Hong Kong people in evaporated by HK$2.2 trillion, and lost an average of HK$2.67 million per owner, and the number of negative assets reached 170,000.
Under the crisis, a large number of companies laid off employees and closed down, and the unemployment rate rose to its highest level in 20 years.
Hong Kong is filled with grief, and the media's titles are full of words such as "suicide", "taking medicine", and "hanging the neck".
If the stock market and real estate market fall further, banks will be forced to sell collateral assets, which will put the stock market and real estate market into a vicious cycle of selling-down. Some small and medium-sized banks will even be forced to go bankrupt due to too many bad debts, which will bring a fatal chain blow to the Hong Kong financial system.
However, the greedy and bloodthirsty international capital did not intend to stop, and rumors swept over again:
Hang Seng Index fell below 4,000, just around the corner!
continue to be suppressed by international capital, and Hong Kong is in danger of collapse at any time!
Faced with the insatiable international capital, the Hong Kong government finally couldn't bear it anymore and made up its mind to fight back. A shocking and unprecedented financial war officially kicked off...
references
1. "Practice of "One Country, Two Systems" in the Hong Kong Special Administrative Region" White Paper - State Council Information Office website
2. Dare to draw the sword and successfully respond to the Asian financial crisis - Central Commission for Discipline Inspection and National Supervisory Commission website
3. Asian financial crisis - it is difficult to enter the market, and it is even more difficult to delist - Hong Kong Monetary Authority
4. Exchange rate war - Beylin
5. Sneak attacks of hot money: How we deal with it - Li Youhuan
6. Research on the war on financial defense in Hong Kong - Tang Yong
7. Bauhinia blooms in Xiangjiang - A personal experience of the 20th anniversary of Hong Kong's return - National Committee of the Chinese People's Political Consultative Conference Literature, History and Learning Committee
8. Modern financial investment tool - Wang Hongzheng
9. Hong Kong's financial defense battle - Li Yongsheng
10. Successfully fought against the Asian financial crisis in 1997: China showed its style of a great power - Xinhuanet
11. Today 21 years ago, that thrilling battle to defend Hong Kong! ! ——Wang Weiqun
12. Hong Kong Financial Defense War: Hong Kong Government Fights Soros——Zhang Yan
13. Review today 17 years ago: How the Hong Kong government defeated stock market manipulators——Securities Times
14. How did Hong Kong save the market in 1998——Lin Hai
15. Detailed explanation of the financial defense war in Hong Kong 1998 - Luo Yi and others
16. Hong Kong financial defense war-Lu Ping
17. Former Soros personnel exposed: How do we create the Asian financial crisis? ——First Financial Daily
18. Soros's desire to short Hong Kong is immortal——Chen Jiulin
19. Review: Hong Kong's bloody battle with the tycoon Soros in 1998——Sina Finance
20. Successfully responded to two financial crises and Chinese characteristics are unique——Securities Daily
21. Defeat Soros, the "Pearl of the East" creates a new century - Jin Ji
22. The thrilling "war" in the peace era - Shi Liping and others
23. That battle of financial defense - Su Manli
24. The whole story of the Hong Kong financial war and its inspiration left behind - Shi Danlin
25. Research on the form of modern financial war - Ke Yuan
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