lost in 1997, the hedge fund owned by American financial tycoon Soros launched a series of attacks on Southeast Asian countries, which shocked the whole world. After sweeping across Southeast Asian countries, Soros turned his attention to Hongkong, China. So how did Soros do it?
On a dark night in a month, suddenly at midnight, Soros sold short Hong Kong dollars in new york. It seems that our stock market announced the increase of stamp duty at midnight at 5.3 that year. What is short selling? Today, I lent a stock to a securities company, sold it at the price of 1 yuan today, and returned it to the securities company when the stock price fell to 6 yuan tomorrow. Since I sold it in 1 yuan and bought it in 6 yuan, I earned 4 yuan. Our stock has to go up to make money. What about short selling? Only when the stock price falls can you make money.
Therefore, Soros's purpose in short selling Hong Kong dollars is to attack Hong Kong dollars and bet on the decline of Hong Kong dollars! Just like short selling stocks, it can make money as long as the Hong Kong dollar falls. But it is unreasonable for Soros to do so, because Hong Kong's exchange rate system is very strange. He is not simply fixing the exchange rate, but linking it to the US dollar exchange rate.
what is a fixed exchange rate? Fixed exchange rate means that the government sets a foreign exchange price, for example, one dollar for seven yuan. If the dollar price is high, the government will throw dollars to suppress the dollar price, and buy RMB to raise the price to adjust it. The government will maintain this exchange rate by buying and selling foreign exchange of dollars, and keep one dollar for seven yuan.
But Hong Kong is not. Hong Kong is the linked exchange rate, so what is the linked exchange rate? It is different from the fixed exchange rate, that is, the three note-issuing banks in Hong Kong, including HSBC, Standard Chartered Bank and Bank of China, must deposit US dollars with the Hong Kong Monetary Authority as long as they want to issue Hong Kong dollars, which means that I must deposit 1 US dollars with the Monetary Authority before the banks can issue 75 yuan Hong Kong dollars. If you don't deposit US dollars, you can't issue Hong Kong dollars. This is the linked exchange rate. This is almost the only one in the world. Unlike Chinese mainland, China does not need to deposit US dollars to issue RMB. Theoretically, the China government can print as much RMB as it wants. But Hong Kong is not. Hong Kong must deposit US dollars to issue Hong Kong dollars. In this way, the Hong Kong dollar is actually a token of the US dollar.
Since Hong Kong dollars are veiled dollars, how can Soros go short? How could he go against the dollar? What about those who use dollars to attack dollars? Unless Soros doesn't want to live, then the US government will certainly arrest him. It's unreasonable for you to look at it this way. Do you always use different currencies to attack Soros? Right? So he couldn't have succeeded at all, but the result frightened us. Oh, my God! It's over! It's over! Soros is going to attack us!
so the hong kong monetary authority made a decision on the spot, saying that it was not allowed to borrow energy. That is to say, Soros sold Hong Kong dollars at a high price today, and he will buy back Hong Kong dollars tomorrow. Right, but he sold Hong Kong dollars today and told him that he couldn't buy Hong Kong dollars when he returned it tomorrow. If he couldn't pay it back, wouldn't Soros just breach the contract and pay a fine? Then you failed to attack the Hong Kong dollar? Didn't we just beat it? So at this time, we did something very meaningful, that is, let Soros borrow less than Hong Kong dollars, and ask him to pay back the money. If he doesn't pay back the money, he will lose!
well, in order to prevent Soros from getting Hong Kong dollars, the Hong Kong Monetary Authority threw out a lot of dollars to buy Hong Kong dollars and bought all the Hong Kong dollars on the market, which means that Soros can't buy Hong Kong dollars and pay back the money. So the Hong Kong dollar is gone, right! Soros can't buy Hong Kong dollars either. But have you ever thought that Hong Kong dollars are gone? What about the interest rate of Hong Kong dollars? It will definitely go up, right? Because there is no Hong Kong dollar. What should I do if I need Hong Kong dollars? I had to borrow Hong Kong dollars at a high interest rate, didn't I? Well, I'll tell you, the result of your recovery of Hong Kong dollars was that there was a shortage of Hong Kong dollars in the market, so the interest rate of Hong Kong dollars soared immediately. Do you know how much it rose? One day's interest rate rose to a sky-high price of 28%.
What will happen to the Hong Kong stock market at that time, needless to say; Plummet! Before Soros attacked the Hong Kong dollar, he had already shorted 8, Hang Seng Index contracts. What did he bet on? Gambling is the collapse of the Hang Seng Index. What is short selling? That is, he first borrowed 8, Hang Seng Index to sell it at a high price, and then bought 8, contracts and returned them tomorrow when the Hang Seng Index fell to a low point. So what did Soros really make money from? It is to make money by short selling of stock prices, not foreign exchange.
As a result, when the interest rate rose to 28% on October 23, 1997, our stock price plummeted and the market value of $4 billion was wiped out. Soros's sniper, after 1997, the Hang Seng Index dropped from the peak of 16,673 points to 6,66 points, a drop of 6%. With such a move, we completely failed.