The Industrial Giant Reborn - Chapter 659

c649 The Battle to Defend the Hong Kong Dollar (Part 1)

In July 1997, while the entire Hong Kong community was still celebrating its return to the motherland, an unprecedented Asian financial crisis began.

As early as 1993, at the World Economic Forum in Davos, Switzerland, a 38-year-old information minister from Singapore shocked everyone: Asia will become the leader of the global economy. Because according to calculations, if the Asian economy continues to develop at the previous 6% rate, by 2000, the East Asian economy will account for 30% of the global economy.

After the Japanese real estate bubble crisis burst, the world laughed at how arrogant Japanese officials and consortiums were. They actually claimed to buy the entire United States and then rent it back to Americans to live in. But when it happens to me, it’s not the same.

At that time, the booming Asian economy created an epoch-making economic miracle. The World Bank spent huge sums of money to invite a large number of experts to study the dynamics and mechanisms of the rise of Asian countries, because during World War II, Asia suffered greater losses than Europe. The subsequent economic development rate far exceeded that of South America, Africa, Eastern Europe and other regions that were hardly affected by the war. The Middle East, relying on underground oil, was slightly better.

Asia as a whole has made great achievements in various economic fields. Tourism, port trade, airports, automobiles, electronics, finance, and infrastructure have all surpassed all other countries except Europe and the United States. The development speed is even more outrageous, even exceeding In the early years of development in Europe and America.

In particular, the Four Asian Tigers have created an unprecedented economic miracle. The Pacific Economic Circle is about to emerge, and the global economy is paying attention to Asia, especially Southeast Asia.

Compared with the Asian economy, European and American countries have fallen into a state of economic stagnation. That is to say, the United States relies on Silicon Valley companies, and the data is slightly better. Some scholars even put forward the “Western decline theory”, singing short on the West and bullish on the East.

This is actually an obvious “praising”, but many people are still fooled. East Asian countries, in order to achieve further economic success, have begun various “high-risk” operations. Anyway, as long as the Asian economy does not collapse, no matter how great the risk is, It won’t turn into reality.

The whole of East Asia is completely in a state of despair, especially when many Americans start working for East Asian bosses, which satisfies their psychological changes. It is quite similar to the happiness in public opinion when British people in Hong Kong worked for Chinese 20 years ago.

Even Argentina and Australia intend to join the ASEAN Free Trade Area in East Asia, completely regardless of their geographical location. It is a bit like Japan once proposed the policy of “leaving Asia and joining Europe”.

However, all this was actually just a dream. A bubble driven by hot money was about to burst by 1997.

The fundamental reason for the earliest development in East Asia was that after the emergence of containers, ocean transportation costs dropped sharply. In addition, factors such as too expensive labor in Europe and the United States and blood-sucking labor unions also intended to transfer a large number of labor-intensive enterprises in the country. At this time, the average education Some Asian countries with a large number of tourists have become the most suitable transfer locations.

The migration of a large number of industries has naturally promoted economic development, but the biggest problem in human economic society is that when the economy achieves some success, the accompanying blood-sucking real estate and finance will also follow.

Both local capital and overseas capital have discovered that building factories is not as profitable as flipping houses. So a lot of capital came in.

Herein lies the problem. Unlike the mainland, these countries do not restrict foreign exchange controls in order to attract foreign investment. This means that foreign investors who have made money in the country can leave and cash out at will.

For example, if a large overseas capital invests one billion U.S. dollars into the real estate market of an East Asian country to purchase properties, and a few years later prices in the country increase fivefold, regardless of exchange rate and tax issues, then sell and cash out and leave. , which is equivalent to a net profit of 4 billion U.S. dollars from the country. Such a large sum of money is essentially the foreign currency exchanged by countless workers with their hard-earned money, and then was taken away by foreign capital.

Not to mention, you can use leverage to enter the real estate market. At the same time, local companies can also cash in US dollars in this way.

In the same way, the same goes for the stock market.

When international hot money feels that your country’s economy is okay and the economy will get better and better in the future, they will bring in a large amount of capital. The more people enter in real estate and the stock market, the better the data will be. So hello everyone. Things are going well together, but once the time comes and a large amount of money is ready to leave the market, that will be the beginning of the crash.

This is just like a bank being run. Even a bank with normal business cannot withstand a run. Similarly, a normal country’s foreign exchange reserves cannot withstand a large amount of funds that have been invested and now have appreciated several times or even ten times. Withdraw again.

Once a run does occur, in order to prevent the country’s foreign exchange from being emptied by the run, the local currency exchange rate must depreciate on a large scale, because only if it depreciates, domestic and foreign investors who hold a large amount of local currency ready to exchange can only exchange less foreign exchange.

Hedge funds such as Soros took advantage of this threshold to short the country’s currency on a large scale, and short selling required selling in advance, which further increased the depreciation pressure on the country’s currency.

As long as the country’s government does not have enough foreign exchange, it must devalue the currency. Otherwise, once the foreign exchange is gone, the currency will only collapse even more.

In this way, Soros will naturally make huge profits. This is true for the previous British pounds, Mexican pesos, various South American currencies, etc.

The first country to be attacked in Asia is Thailand. Thailand’s debt is extremely heavy at this time, and internal housing prices are also high enough. Among several countries with relatively good economic development in Asia, it is considered poor, and it is just right to detonate the Asian financial crisis. The trigger of the crisis.

Therefore, Soros personally came forward to promote that the Thai baht will inevitably depreciate this year. You must know that after previous wars against national currencies such as the pound sterling and the Mexican peso, Soros has become the world’s top financial speculator, and no one can predict it. On the other hand, although his success is also the result of Yingjiang and a large amount of hot money following him, this is also his ability.

In addition, Thailand’s own economy is really experiencing serious problems. Even the internal government meeting in early 1997 judged that exports and the economy will experience negative growth this year. The world has begun to be less optimistic about the Thai baht exchange rate. This is what Soros needs. Once everyone If you are not optimistic about it, then even if your country has no problem, it will be difficult to withstand the run.

Starting in February, Soros began shorting the Thai baht on a large scale. Together with other speculators, it put tremendous pressure on the Thai government. After investing more than 4 billion US dollars every month, it still could not prevent the decline of the Thai baht exchange rate. In June this year In August, the Thai government asked Japan and Malaysia for help, but they were rejected. In the end, Thailand’s deputy prime minister and minister of commerce resigned.

On July 2, the day after Hong Kong’s return, the Thai government exhausted its 35 billion U.S. dollars in foreign exchange, and finally had to abandon the dead-end baht currency and switch to free floating. However, on this day, the price of the baht plummeted 20%. , no one knows how much profit Soros made from it.

East Asian countries have a lot of cooperation and debt relationships with each other. A sharp drop in the exchange rate of one of them will inevitably affect other countries. In addition, Soros immediately followed up and attacked the currencies of other countries. Suddenly, the entire The Asian financial market is in a bloody storm. Some countries, like Thailand, tried their best to resist, but were unable to withstand the attack of short orders. In the end, they had to be like Thailand. While losing foreign exchange, the exchange rate still plummeted. Therefore, some The country simply raised its hands and surrendered. After resisting for a while, it announced that the exchange rate could only float.

Time soon came to March. In just three months, the currencies of more than a dozen countries in Asia fell one after another. Soros alone was estimated to have earned more than 10 billion U.S. dollars in profit, and he also It is just one of the larger locusts among countless other locusts. A large number of other hot money participated in it, looting the wealth of Asian countries over the past thirty years of development.

Although this bubble would have been burst even without this attack, the actions of these hedge funds still seriously increased the losses of Asian countries.

In October 1997, in the foreign exchange market, a large amount of short orders for Hong Kong dollars were suddenly dropped, which instantly caused panic in the market. Everyone knew that Soros was here. The stock price of the entire Hong Kong also plummeted in response, and even the trading volume of house prices also dropped simultaneously. After all, if the Hong Kong dollar also fell sharply, then as long as the assets in Hong Kong were to fall, everything would fall.

Hong Kong, Hutchison Whampoa Building Headquarters.

“Sheng Chen, a large number of Hong Kong people are now desperately trying to exchange for US dollars or gold, which has put a lot of pressure on the Hong Kong dollar.” said a middle-aged man about 45 years old, who is Zhou Jiayang of Hutchison Whampoa Group. Yang Wenkai, his successor.

“Normally, Soros’s most powerful helper is actually not the international hot money, but all the panicked people in every region.” Chen Zhiwen said calmly.

In such a currency confrontation, what Soros contributes most is not his funds, but his reputation. In fact, this is also what many followers behind him need. They need a famous person to take the lead. This causes panic among the people and capital in the other country.

Imagine that when the currencies of other neighboring countries and regions depreciate by more than 20% under Soros’ attack, then he is now targeting Hong Kong. How many people are confident that Hong Kong can withstand this attack?

Although Hong Kong is a developed region, after all, it is just a city with a world-famous “free market policy”. Besides, if Hong Kong dollars are now converted into U.S. dollars or gold, if Soros wins, he will not lose, and the Hong Kong government will win. , you still don’t lose money, but if you don’t change, you may have a 50% chance of losing.

In this case, many people will definitely choose to exchange. But if people in a country or region no longer believe in their own currency and demand exchange for foreign exchange, it will put greater pressure on the government than Soros. No government can withstand this kind of run. This is why Soros , one of the reasons why it can still win in many battles with national currencies.

“Then do we need to prepare?” Yang Wenkai asked. The entire group had mobilized a large amount of US dollars in the past few years. They didn’t know what it was for before. It wasn’t until the outbreak of the Asian financial crisis that they understood the boss’s intention. They also I have to admire that my boss is really awesome.

“Don’t worry about it for the time being. We can only be regarded as a rare soldier, not the main force. The Hong Kong government has sufficient foreign exchange reserves and many policies can be used. We will not be defeated as easily as those countries in Southeast Asia.” Chen Zhiwen said.

Although he is an extremely wealthy country, it can only be said to be comparable to an ordinary small country, but far behind compared to a large country. He will not be more anxious than the original owner and can just wait for the right time.

“Okay.” Yang Wenkai said.

“House prices in Hong Kong may fall. Please pay attention. Hisense Bank is a little more relaxed. If you are not a real estate speculator, normal people should not push too hard, let alone take over the house. You can appropriately postpone the payment or reduce the interest according to the situation. This is also when we gain a good reputation.” Chen Zhiwen added.

“Understood, Chen Sheng.” Yang Wenkai replied.

As predicted, although Hong Kong’s economy also has a big bubble, it does have some real materials. The Hong Kong government has abundant foreign exchange reserves, and the large number of Chinese in Hong Kong will not be so prone to panic and exchange. In foreign exchange, there are even many rich people who secretly agreed not to run on foreign exchange. In addition, this first attack was just a test by Soros. After the Hong Kong government contacted to increase the overnight lending interest, Soros’s short-selling capital retreated.

In the following six months, Soros’ capital aggressively attacked South Korea, causing an unprecedented crisis in the South Korean economy. South Korea’s large consortiums all fell into a serious debt crisis. Among them, these consortiums were themselves responsible for this. In the early days, At that time, large-scale borrowing was carried out, and the most exaggerated loan data was five times its own assets. After the Korean won plummeted, international banks forced debts, causing serious crises for consortiums including Samsung. Another large consortium, Daewoo, directly Declared bankruptcy.

Japan has also been attacked, but Japan is too large and has deep relationships with many American consortiums. In the end, international hot money stopped in the Japanese market.

By 1998, international hot money and Soros began to target Hong Kong and Russia again, intending to achieve their goals of being the eagle sauce behind them by indirectly or directly attacking the two major powers in the WPC.

In July, international speculators launched simultaneous attacks on the futures, foreign exchange and stock markets, constantly attacking the Hong Kong dollar to force the Hong Kong government to raise interest rates. Once the Hong Kong government raises interest rates in order to protect the Hong Kong dollar exchange rate, the stock market will inevitably plummet. International speculators were short selling before. The stock market can make huge profits from it.

Exchange rate and stock market, choose one of the two, this is Soros’s most commonly used trick, and most countries will choose to protect the exchange rate, then they can get huge returns in the stock market, if they do it several times in a row, then the economy of this region or country will , will inevitably be affected as never before.

At the same time, the foreign exchange in the hands of the government will be exhausted in this process. When the foreign exchange is finally used up or the government gives up, the exchange rate will plummet, allowing the country to make a fortune in the process of shorting the exchange rate.

The battle between Soros and the government is not only in the financial market, but also in the public opinion market. A large number of people also began to announce in Hong Kong that the Hong Kong dollar and the RMB were about to plummet, and everyone hurriedly exchanged for US dollars. This is to allow all Hong Kong citizens to run on the Hong Kong government’s Exchange Fund. Once the run does occur, Soros will be able to win without a fight.

At the newly built Land Building headquarters, Chen Zhiwen looked at the bustling exchange crowd not far away, and said to Yang Wenkai beside him: “Immediately announce publicly that our group is optimistic about the future of the Hong Kong market and is preparing to purchase the Hang Seng Index on a large scale, and All blue-chip stocks on all Hong Kong exchanges.”

Soros has many methods with international speculators, and they are intertwined. He does not need to compete with him in the foreign exchange market. As long as he raises the stock market, then they will short-sell Hong Kong stock futures on a large scale before attacking the Hong Kong dollar, and their positions will be liquidated. Once a link goes wrong, it will definitely disrupt his layout. (End of chapter)