Take an example.
On March 3, 1997, the Central Bank of Thailand announced that nine domestic finance companies and one housing loan company had problems of low asset quality and insufficient liquidity. Soros and his men thought that this was a hint of the deeper problems that might occur in Thailand's financial system, so they preemptively ordered the sale of shares of Thai banks and financial companies, and depositors made large withdrawals from all financial and securities companies in Thailand. At this time, the western impact funds headed by Soros, which were waiting for a large number of Southeast Asian currencies, jointly sold the Thai baht in a large scale. Under the siege of many western "heroes", the Thai baht was irresistible for a while and kept falling. In May, the lowest jumped to 26.7 baht per dollar. The Central Bank of Thailand devoted all its efforts to the whole country and started an anti-encirclement campaign against Soros in the middle and late May, aiming to break Soros's will and make him retreat from difficulties and stop leading the public to attack the Thai baht.
As a first step, the Central Bank of Thailand formed a coalition with Singapore, and used a huge sum of about $12 billion to absorb Taixi. The second step is to follow Mahathir's strategy and tactics in 1994 and use administrative orders to prohibit local banks from lending Taimu to Soros's army; The third step is to raise the interest rate substantially, and the overnight interest rate will rise from about 1% to 1-15%. With a three-pronged approach, cutting-edge weapons and strong counterattack, Taimo rose to a new high of 252 on May 2th.
due to the sudden tightening of money, the interest cost increased greatly, which made Soros's army unprepared and lost $3 million, which was a blow.
However, Soros is still Soros. According to his intuition, Soros thinks that the Bank of Thailand can do nothing more than this. After trying its best, the Thais did not put themselves in a desperate situation, and the losses suffered were relatively minor. From a certain point of view, Soros thinks that he has already won. For southeast Asian countries, the initial victory was just a blip before the disaster, which could not hurt his vitality at all, nor could it save the fate of the southeast Asian financial crisis.
Soros has been working hard for this opportunity for several years, and this time he is prepared and determined to win. A setback of the vanguard troops will not leave it at that, and Soros will have to fight three wars in Southeast Asia.
In June p>1997, Soros sent troops again. He ordered the three armed forces to rally, ordered hedge funds to start selling US Treasury bonds to raise funds, expanded the size of Soros's army, and launched a fierce attack on the Thai baht again in the later period. In a flash, the southeast Asian inclusive market was filled with smoke, and the two sides fought hand-to-hand combat. Thailand was in chaos, and the war situation was complicated. The major exchanges were like boiling hot soup, and people were running and screaming like crazy.
After a short battle, the Central Bank of Thailand, with only a mere $3 billion in foreign exchange reserves, declared that it was "out of ammunition and food". Faced with the overwhelming Soros army, it was beyond their power to keep the Thai baht at a fixed exchange rate. The Thais had to come up with a last resort, dig up the flesh to mend the sore and implement a floating exchange rate. Unexpectedly, this was expected by Soros, and he also made various preparations for it. Various countermeasures have been implemented, and the fate of the Thai baht has been set on the cross of shame by Soros. The Thai baht continued to decline. On July 24th, the Thai baht fell to 32.5: 1 against the US dollar, a record low. The slaughter of the Thai baht by Soros really made the world miserable, and the Thai people were even more frightened, lamented and blamed the heaven.
Soros adopted a three-dimensional speculative strategy, not just foreign exchange operation. The so-called three-dimensional speculation refers to financial speculation by using the correlation between three or more financial instruments
Soros and the financial crisis in Hong Kong
In the first half of p>1997, some large funds, represented by Quantum Fund, used "leverage" to continuously squeeze the financial market in Thailand, triggering the financial crisis in Thailand. During the subsequent evolution of the financial crisis in Southeast Asia, these funds used "leverage" on a large scale, which aggravated the degree of the crisis. How did they do it? As Soros himself described, "We use our own money to buy stocks, pay 5% in cash, and borrow the other 95%;" If bonds are used as collateral, we can borrow more money, and we can buy at least $5, worth of long-term bonds with $1,. (Soros waiting for Soros on Soros, Hainan Publishing House, 1997). They used their own capital as collateral, borrowed from banks to buy securities, and then continued to borrow with securities as collateral, which rapidly expanded the debt ratio. Not only that, they also widely speculated on various derivatives with the characteristics of "high leverage", thus further improving the leverage ratio. According to The Economist, Quantum Fund did buy put options in large quantities as early as March 1997, borrowed a large amount of Thai baht in the form of swaps, and sold Thai baht futures and forwards, because it was expected that the counterparty would sell Thai baht spot to protect the value of derivative contracts, and it was easy to create devaluation pressure on Thai baht by others. What is worth mentioning is his practice in Hong Kong, which is a classic example of three-dimensional speculation.
under normal circumstances, due to the existence of arbitrage-free equilibrium relationship between financial markets, with the birth and development of various financial derivatives and their markets, the spot market, forward market, money market, capital market and derivative market of foreign exchange are interlocking, locking up one after another and moving the whole body. A typical example is that in October 1997 and several subsequent times when international speculators attacked Hong Kong's financial market, international speculators first borrowed a large amount of Hong Kong dollars in the money market and sold Hong Kong dollars, forcing the Hong Kong Government to sharply raise the interbank interest rate in the money market; The sharp rise in interbank interest rates in the money market caused the stock market to fall; At the same time, it caused the Hang Seng Stock Index futures to fall sharply in the derivative market. The sharp decline of HSI futures accelerated the decline of the stock market; The decline in stock prices has sharply reduced the confidence of foreign investors in the Hong Kong economy and the Hong Kong dollar, and they have sold Hong Kong stocks in exchange for US dollars, which has put the Hong Kong dollar under a new round of depreciation pressure. The chain reaction of various markets eventually expanded the victory of speculators in an all-round way.
It is expected that an attack on Hong Kong's foreign exchange market will cause a chain reaction, and international speculators will make a three-dimensional layout in various markets. On the one hand, they will increase their bets in various markets, fueling speculation; On the other hand, once the speculation is successful, a full harvest can be achieved, matching the speculative risks with high returns. Soros made a vivid description of this: "If you regard the general portfolio as a flat or two-dimensional thing, as the name suggests, it is easiest to understand this. However, our investment portfolio is more like a building. Based on our share capital, a three-dimensional structure is established, with structure and financing, supported by the pledge value of basic shares. ..... We are willing to invest capital according to three main axes: stock position, interest rate position and foreign exchange position. ..... Different parts reinforce each other, creating this three-dimensional structure composed of risks and profit opportunities. Usually two days-a rising day and a falling day-are enough to inflate our fund at a high speed. " (Soros waiting for Soros on Soros, Hainan Publishing House, 1997). International speculators made full use of this "three-dimensional speculation" strategy when attacking Hong Kong's financial market: first, they borrowed a lot of Hong Kong dollars in the money market; In the stock market, borrow constituent stocks; Accumulate short futures in the stock futures market; Then use spot trading to short Hong Kong dollars in the foreign exchange market and sell Hong Kong dollar forward contracts at the same time; Forcing the hong kong government to raise interest rates to defend the linked exchange rate; In the stock market, the borrowed constituent stocks are thrown out to suppress the futures index. On the whole, based on the close relationship between financial markets, the "three-dimensional layout" strengthens the risk exposure of speculators and greatly increases the power and income of leveraged speculation.
The Hong Kong dollar is linked to the exchange rate system, which has an automatic adjustment mechanism and is not easy to break. However, the interest rate of the Hong Kong dollar will easily rise sharply, which will affect the stock market's sharp decline. In this case, as long as you sell short in the stock market and futures market in advance, and then borrow a lot of Hong Kong dollars from banks, the interest rate of the Hong Kong dollar will rise sharply and the Hang Seng Index will plummet, you can get speculative profits as in other countries. Since October 1997, international speculators have made four attempts in Hong Kong's stock market, foreign exchange market and futures market, and all of them made huge profits in the first three times. From the end of July to the beginning of August, 1998, international speculators once again attacked the Hong Kong dollar through hedge funds to push up interest rates and interest rates. Obviously, their attack on the Hong Kong dollar is only superficial, and the stock market and futures market are the real main targets. A diversion from the East is Soros's consistent means of speculation and has been successful many times.
Speculators sold stocks and futures index in the securities market, and suppressed the Hang Seng Index and futures index, so that the Hang Seng Index dropped from 1, points to 8, points and reached 6, points. When the rain is coming, the bad news in the securities market is flying all over the sky, and speculators take the opportunity to make a big rumor, threatening that "the RMB can't stand it, and it will depreciate soon, and it will be depreciated by more than 1%." "The Hong Kong dollar will be decoupled from the US dollar, depreciating by 4%" and "The Hang Seng Index will drop to 4, points". Its purpose is nothing more than disturbing people's hearts, creating a "herd mentality", and then taking the opportunity to fish in troubled waters. On August 13th, the Hang Seng Index once fell by 3 points and broke through the 66 mark. At the close of the market, the decline narrowed, but it still fell by 199 points to close at 666 points. Its trend is very similar to that of the Shanghai and Shenzhen stock markets in the second half of 21. Every day, mines ring, and every week falls. The trend of "knocking down" is shocking.
While depressing the Hang Seng Index, international speculators have accumulated a large number of short positions in the Hang Seng Index futures market. Every time the Hang Seng Index drops by 1 point, each short position contract can earn HK$ 5. In the first 19 trading days on August 14th, the Hang Seng Index plummeted by more than 2, points, and each contract can earn more than HK$ 1,, which shows the high income!
After the Hang Seng Index was suppressed to the bottom of 666 on August 13th in the first round, the Hong Kong government mobilized Hong Kong, Chinese and British capital to enter the market, and launched a battle with its rivals for the August stock index futures contract. Speculative capital means that the air force wants to suppress the index, while the Hong Kong government wants to hold the index, forcing speculators to sell contracts at a high level in advance and fail to cash out at a low level before the end of August. After the Hong Kong government entered the market, it bought a large number of August stock index futures contracts with speculative capital short, which pushed the price up from 6,61 points before entering the market to 7,82 points on the 24th, an increase of more than 8%, which was higher than the average opening price of 7,5 points of investment capital, and achieved initial success. After the market closed, the Hong Kong government announced that it had used the exchange fund to intervene in the stock market and futures market. However, the financial snipers were still unwilling. According to the original plan, on August 16th, they forced Russia to give up the action of defending the ruble, which led to the overall crash of the US and European stock markets on August 17th. However, to their great disappointment, on August 18th, the Hang Seng Index narrowly missed, falling only 13 points at the close.
In the second round, the two sides launched a warehouse-changing war from August 25th to 28th, forcing speculative capital to pay a high price. On the 27th and 28th, speculative capital rushed out in the stock spot market in an attempt to beat the index. At the same time, the Hong Kong government held fast to the stock market. After eight days of soul-stirring battles, the August contract price was pushed up to 7,99 points in the futures market, and the settlement price was 7,851 points, 1,2 points higher than before entering the market. On August 27th and 28th, the Hong Kong Government accepted all the sales orders. As a result, the transaction amount reached HK$ 2 billion on the 27th and HK$ 79 billion on the 28th, setting a record for the highest transaction in Hong Kong.
On the 27th, on the eve of futures settlement in August, the SAR Government made a decisive battle gesture. Although the global financial news was extremely bad that day, the US Dow Jones stock index fell by 217 points, and the European and Latin American stock markets fell by 3%-8%. The Hong Kong stock market faced a severe test. According to market participants, the Hong Kong Government injected about HK$ 2 billion a day, which increased the Hang Seng Index by 88 points. Lay the foundation for the final decisive battle.
On the same day, the International Speculator Quantum Fund declared that the Hong Kong Government would fail. In an interview with CNBC TV, the chief investment strategy of Soros Quantum Fund, an international speculator who speculates on the Hong Kong market, first admitted that Quantum Fund has been shorting the Hong Kong dollar and the Hang Seng Index. He also said that due to the economic recession in Hong Kong, the "war" launched by the Hong Kong government against international investors in the foreign exchange market and the stock market will end in failure. Although Soros made a big move every time, he never publicly admitted that he was attacking a certain currency. This kind of event in which he openly challenged a government in the name of a company or some people and threatened to defeat a certain government was unheard of and unprecedented.
28th is the futures settlement period, and speculators have a large number of futures orders that must be sold when they expire. If the stock market and foreign exchange market can stabilize at a high level or continue to break through on that day, speculators will lose hundreds of millions or even billions of dollars, otherwise the tens of billions of Hong Kong dollars invested by the Hong Kong Government a few days ago will be thrown into the sea. The scene of the fighting between the two sides on that day was far more thrilling than the day before. The turnover of the whole day reached a record of HK$ 79 billion. The Hong Kong Government made every effort to resist the unprecedented selling pressure from international speculators. At the end of the market, the Hang Seng Index stood at 7,829 points, up 1,169 points or 17.55% from August 13th, before the HKMA entered the market.
Donald Tsang, Hong Kong's Financial Secretary, immediately announced that the Hong Kong government had won the battle to crack down on international speculators and defend Hong Kong's stock market and currency. Market participants in Hong Kong estimate that the Hong Kong Government has invested more than HK$ 1 billion in the two-week stock market support operation, and concentrated on buying the shares of several major blue-chip companies in Hong Kong. It is estimated that the Hong Kong Government currently holds 4% of the shares equivalent to the total market value of US$ 21 billion in the Hong Kong stock market and has become a major shareholder of several blue-chip companies in Hong Kong.
The Hong Kong Futures Exchange introduced three new measures on the 29th. That is, from the opening of the market on August 31, a special deposit of 15% will be levied on customers who hold more than 1, HSI futures contracts, that is, the deposit for each HSI futures contract will be adjusted from HK$ 8, to HK$ 12,; Reduce the requirement for reporting a large number of positions from 5 contracts to 25 contracts; When reporting, the identity of a large number of position holders must also be reported to the Futures Exchange.
on the 31st, the stock market plunged by 7.1% after the government terminated the support action, but the decline was less than expected by market participants. The Hang Seng Index fell 554.7 points, closing at 7,257.4 points, with a total turnover of only HK$ 6.6 billion, less than one tenth of last Friday's record high of HK$ 79 billion. Some investors had predicted that the index might plummet by 15%.
However, speculative capital is not willing to rest. They think that the Hong Kong government has invested about HK$ 1 billion, and it is impossible to sustain it for a long time. Therefore, they decided to change the short-selling stock index futures contract from August to September to fight a protracted war with the Hong Kong government. Since August 25th, speculative capital has been short-selling September contracts in large quantities while closing positions in August contracts. At the same time, the Hong Kong government pursued victory on the basis of closing the contract in August, making the price of the September contract 65 points higher than the settlement price of the August contract. In this way, speculative capital has to pay more than HK$ 3, for each contract. The investment capital completely failed in the competition for the contract in August.
In the third round, the Hong Kong Government continued to push up the price of stock index futures in September, forcing speculative capital losses to leave. On September 7, the financial management department of the Hong Kong government promulgated new regulations on foreign exchange, securities trading and settlement, which made speculators