You should be referring to the 1997 Asian financial crisis. Let me put it in my own words in layman’s terms

1. Why international financial capital poured into Hong Kong:

< p>Because international financial capital is profitable, and Hong Kong’s foreign exchange system is a linked exchange rate system, this system allows international financial capital to take advantage:

For example: Hong Kong has three note-issuing banks: HSBC Bank, Standard Chartered Bank, Bank of China. They must pay 1 US dollar to the Hong Kong Monetary Authority for every 7.8 Hong Kong dollars issued to ensure that the Hong Kong dollar is backed by the US dollar and maintain exchange rate stability.

When buying and selling Hong Kong dollars in the foreign exchange market, pay attention to settling in U.S. dollars. If the buying and selling of Hong Kong dollars fluctuates significantly, it can easily cause fluctuations in the Hong Kong dollar exchange rate, and international financial capital can make money from the price difference and seek huge profits. The specific method is explained in question 2.

2. What are the channels for the inflow of international financial capital?

This is more complicated, let me explain it in layman’s terms:

In general, Soros used his Quantum Fund and Tiger Fund to attack the Hong Kong dollar, selling Hong Kong dollars and selling in large quantities. Airport stock futures are profitable.

Details:

(1) Soros first borrowed a large amount of low-interest local currency, used leverage to sell a large amount of local currency, and sold Hong Kong dollars, that is, exchanging a large amount of Hong Kong dollars for US dollars, and the supply of Hong Kong dollars increased significantly. ——Let the Hong Kong dollar fall until the government’s foreign exchange reserves are exhausted (the government’s U.S. dollars are exchanged for the Hong Kong dollars borrowed by Soros). Hong Kong has a linked exchange rate system. Once the government does not have enough U.S. dollars, it will have no choice but to abolish the linked exchange rate system and eventually have to announce a devaluation.

(2) If the Hong Kong dollar depreciates, Soros will lend Hong Kong dollars to an institution today and sell them at today's market price. Then he will buy Hong Kong dollars at tomorrow's price tomorrow and then return them. For example, if I sell the Hong Kong dollar today for 100 yuan, I will buy it back tomorrow after the Hong Kong dollar drops to 70 yuan and return the Hong Kong dollar. Since I sold it for 100 Hong Kong dollars and bought it back for 70 Hong Kong dollars, I made a profit of 30 yuan.

(3) But the problem is not that simple. The Hong Kong government used foreign exchange reserves to rescue the market, and the Chinese government also lent the Hong Kong government US$10 billion. Soros, how much do you want to sell? I, Hong Kong The government will receive as much as it takes to ensure the stability of the Hong Kong dollar's value. At the same time, the interbank lending rate was doubled, making it impossible for Soros to buy low-priced Hong Kong dollars from banks, and Soros would not be able to repay the money he borrowed in (1).

Moreover, the Hong Kong Monetary Authority sold a large amount of U.S. dollars to acquire Hong Kong dollars, taking back all the Hong Kong dollars on the market, so that even Soros could not get the Hong Kong dollars.

Soros sold the Hong Kong dollars for 100 yuan today, and tomorrow he will go to the market to buy back the Hong Kong dollars for 70 yuan and then return them. If this guy can't buy Hong Kong dollars in Hong Kong, he won't go back. If he doesn't go back, he will have to pay a fine and breach the contract, and he will lose.

(4) So Soros suffered a huge defeat in the Hong Kong foreign exchange market. He lost a lot of money in foreign exchange. Soros collapsed and lost $1 billion. The Hong Kong government won a resounding victory. After this battle, Soros's "Quantum Emerging Markets Growth Fund" closed down, the "Quantum Industrial Holdings Fund" and the "Qusar International Fund" merged, and the "Quota Fund" lost 13% of its assets. Two fund managers among Ross's five funds have resigned, and the total fund size of more than 12 billion US dollars is about to undergo major surgery.

The war in the foreign exchange market is finally over, Soros suffered a tragic defeat, but there is still a stock market battlefield below:

(5) But Soros is not that simple, he still has backup options. Before he sniped at the Hong Kong dollar, he short-sold 80,000 Hang Seng Index futures contracts. He first borrowed a basket of stocks and sold them at a high price. When the Hong Kong stock market fell sharply, he bought a basket of stocks at a low price and paid them back. Just like the 100 yuan above , the example of HKD 70 is similar.

(6) After Hong Kong rescued the market and took back the Hong Kong dollars, there was a shortage of Hong Kong dollars in the market, so the interest rates of Hong Kong dollars immediately skyrocketed! The Hong Kong interbank offered rate rose to 280% in one day. It should have been 3% or 4%.

Interest rates have skyrocketed, and Hong Kong companies have been unable to borrow money. Capital and financial transfers have become extremely difficult, and the Hong Kong stock market has naturally plummeted.

(7) Soros placed a short position on stock index futures at 16,000 points and closed the position at 7,000 points. That is, he first borrowed a basket of stocks and sold them at a high price. If the stock market fell sharply, he then bought a basket of stocks at a low price and paid back. Back, he made a fortune in the stock market.

At this point, the stock market battlefield is over, and Soros has made up for part of the huge losses in the foreign exchange market with gains from the stock market. But overall, he should still have lost a lot, because Soros: Losses in the foreign exchange market > Gains in the stock market

3. What impact has the inflow of international financial capital had on Hong Kong?

< p>On October 23, 1997, when interest rates were raised to 280%, the Hong Kong stock market plummeted, and the stock market value of US$40 billion disappeared. After 1997, the Hang Seng Index fell from about 16,000 points to 6,500 points, a loss of about 60%. Just like this, it was a complete failure.

Hong Kong’s property prices have continued to fall since their peak in 1997, and by 2003 they had dropped by almost 65%.

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 equity was as high as 170,000. It was not until 2009 that it returned to the level of 1994.

From 1997 to 1998, the entire Hong Kong was looted, so the people of Hong Kong have always been very poor. From this time on, Hong Kong people began to develop Soros phobia, and they were scared to death when they heard about Soros.

Hong Kong's real economy experienced negative growth in 1998. Hong Kong's economy has accumulated a large number of bubbles during years of rapid development, especially in the real estate market. The artificially high real estate prices cannot withstand the test of the financial crisis. In 1998, the average monthly number and amount of building transactions fell by more than 50% compared with the same period in 1997. The sharp decline in asset prices led to the bursting of the bubble, which triggered This has created a serious negative wealth effect, greatly suppressed internal demand, and directly affected investment in the real economy.

At the same time, the unemployment rate is also increasing. After this blow, it took 10 years for Hong Kong's per capita GDP to return to the 1997 level.

4. What response measures have Hong Kong taken

The above has actually been explained in detail.

(1) The government intervenes in the foreign exchange market and uses foreign exchange reserves to purchase Hong Kong dollars to prevent the sharp depreciation of the Hong Kong dollar

(2) Increase the interbank lending rate to make Soros unable to buy Go to low-priced Hong Kong dollars

(3) Ask the mainland government for assistance with foreign exchange reserves

(4) The government supports the market and uses the purchased Hong Kong dollars when the stock market plummets Enter the stock market to prevent stocks from falling again and again and prevent the stock market from crashing.

The above is my original work.