The first part is the preparation period. Speculators borrow Hong Kong dollars at low interest as ammunition, sell Hong Kong dollars in the futures market and short the futures index at the same time. The second part is the market making period. Once there is an opportunity in the external market that is beneficial to speculators, they will spread rumors and sell Hong Kong dollars crazily, forcing the Hong Kong government to "hold interest", causing the Hang Seng Index to plummet and even selling stocks by borrowing goods. The third part is the harvest period. When the Hang Seng Index plummeted, short positions were closed and speculators left with money.
At that time, Soros contacted several major funds around the world and secretly started to buy Hong Kong stocks (Hong Kong stocks can be bought from all over the world through brokers), and this kind of buying was continuous, which made Hong Kong stocks keep rising from the low point of 1996, causing Hong Kong people to follow wildly, making the Hang Seng Index break new highs again and again, just like the current A shares.
Soros kept pushing up the stock market in the first half of 1997. Near the highest point, it was scattered and hidden, but he kept opening a large number of put options for stock index futures delivered at the end of June. The Hong Kong government has been closely monitoring this mysterious force. The closer you get to July 1, the clearer your opponent's motives and operational strategies. But the problem is that the Hong Kong government's foreign exchange reserves are still unable to cope with possible financial attacks alone. As a result, Hong Kong's senior financial officials secretly went to Beijing, and were promised by the central authorities to spare no effort to give full support to China's foreign exchange reserves, so a financial Armageddon began.
The highest point in the first half of the year was 1997, and the Hang Seng Index hit a record high above 16000. With the approach of the return day, Soros commanded his own joint army and began to ship one step at a time. The main purpose of its stock delivery is not to make money, but his strategy is to profit from the empty returns of stock index futures. (hedging technology)
Soros's method is very simple, the main condition is that he must have enough funds as a support and choose the right time to manipulate the market. He used some funds to buy stocks (especially index stocks) continuously, regardless of the cost. When the stock index reaches a high level, a large number of empty orders of stock index futures will be opened. Then, starting from a high level, resolutely lower the stock index, and the stocks thrown out will of course be profitable, but they are not the main source of profit. The real profit lies in the empty orders of stock index futures. Of course, the most important thing in this operation is to use the follow-up power of the market, and all market participants will become the driving force-if they go up, they will help them go up, and if they fall, they will help them fall.
The day of the decisive battle is June 28. Prior to this, the Hang Seng Index had been pushed to around 10,000 points. At this time, the scattered people are already sad and wild. The genius of the Hong Kong government lies in its silence, its refusal to give up, allowing Soros to suppress and dominate the market and paralyze opponents.
On the morning of the 28th, Soros's stock selling pressure began to be released steadily, which oppressed the Hang Seng Index to continue to accelerate its decline, causing a panic of collapse, and numerous scattered people who fled for their lives helped him depress the index. By the time it fell to more than 4 thousand, the scattered people were already crying Soros saw victory in sight, only to find that there was a mysterious fund from the beginning, which quietly closed all the countless orders. He began to get nervous and launched all his allies' stocks to smash (throwing at no cost, it must be sold at a loss), but the mysterious funds were quietly accepted, but they never rose. Before the market closed, the turnover of Hong Kong stocks had reached a record high. When his stock was almost fired, the Hang Seng Index remained above 4,000 points. But when he borrowed shares from the exchange and wanted to continue short selling, he got the answer that he didn't borrow them (suspected of violating the rules).
In the afternoon, the market began to counterattack, mysterious funds pushed the stock index to rise continuously, and Soros's joint army began to rebel, uniting many parties behind the scenes, repurchasing stocks, and covering their own short futures orders (of course, to reduce their own losses). By the close, Hong Kong stocks had almost completely recovered the lost ground (about 8,000 points) that morning. Soros didn't expect the Hong Kong government to make a move, so he lost Jingzhou and suffered heavy losses (stock loss plus stock index futures loss).
However, after 1997, the Hang Seng Index dropped from around 16000 to 6500, a decrease of about 60%. Property prices in Hong Kong have been falling since the peak of 1997, and almost fell by 65% in 2003. The wealth of Hong Kong people evaporated by HK$ 2.2 trillion, with an average loss of HK$ 2.67 million per owner and the number of people with negative assets as high as 1.7 million. It was not until 2009 that it recovered to the level of 1.994.
From 1997-1998, the whole of Hong Kong was looted. Since then, people in Hong Kong have developed Soros phobia. Every time Hong Kong stocks rose to 16000- 17000, they began to fluctuate greatly, which is called Soros shock.