Chapter 265 Soros' Speech

  Following Zhong Shi's order, the researchers of the Asia Fund began to investigate red-chip stocks in all directions. For more than ten days in mid-August, the office area was not full of people.

By the end of August, the large-scale research activities were declared to be completed. The information fed back from the researchers was very pessimistic. The market generally expected that the PMI in China was far below the 50 line of prosperity and decline, even 45. Not reached. The red-chip companies also generally have insufficient operating rates and idle production.

  In addition to stocks, the currency crisis in Southeast Asia has intensified. Thailand, which bears the brunt, has turned into a financial crisis, with factory closures, company layoffs, institutional bankruptcy, and sharp rises in prices, all kinds of chaos ensued.

  Affected by related markets, the Hong Kong stock market, which hit new highs some time ago, also began to move downward. On August 15th, Friday, the Hang Seng Index fell 400 points all day, or 2.43%, and closed at 16,096 points at the end of the day, a full 800 points lower than the peak of 16,820.

   This day seemed to be a signal, which blew the selling signal of hedge funds on Hong Kong stocks. In the next half month, the Hong Kong stock market continued to decline. By Monday, September 1, when Soros arrived in Hong Kong, the news of the attack of financial predators made this wave of panic and selling reach the highest point, and the Hang Seng Index fell sharply on that day. 709 points, closing at 13425 points all day, a drop of up to 5%.

  Zhong Shi’s prediction is becoming a reality step by step. The first strategy for international hedge funds to attack Hong Kong is to sell some Hong Kong stocks, especially the red chips whose prices have been severely distorted.

During this period, apart from retaining some public shares, the Hong Kong fund under Tianyu Fund has emptied most of its positions, turned to wait and see, and bet on short positions on the Hang Seng Index futures contract. With 5,000 HSI contracts, the HSI’s income in August alone exceeded HK$700 million, making it one of the best-performing funds.

   Soros is here to attend the annual meeting of the IMF and the World Bank. This is a good opportunity for him to show up. Various media have gathered in Hong Kong to see how Soros explained the Thai baht issue.

  The meeting was held at the Hong Kong Convention and Exhibition Center. This is a group building whose overall architectural image is similar to that of a bird spreading its wings. The whole building is located on a huge reclamation area and is one of the landmark buildings in Hong Kong. Not long ago, the handover ceremony of Hong Kong was held here, and now the annual meetings of the World Bank and the IMF will also be held here.

  The Convention and Exhibition Center is located in Wanchai District, separated from Hong Kong Island by Victoria Harbour. Zhong Shi can see the opposite Convention Center through the glass curtain wall every day, but he did not participate in this annual meeting that has attracted worldwide attention.

  The theme of the meeting is naturally inseparable from the currency crisis that is currently intensifying in Southeast Asia. Even in some countries and regions, this currency crisis has turned into a financial crisis, endangering the real economy. Journalists from all over the world have gathered in Hong Kong, preparing to visit senior officials of the IMF and the World Bank on the current situation, hoping to get relevant information from them and the measures they will take to deal with the current currency crisis.

Although he does not work for these financial institutions, but only attended as a special guest, Soros has attracted no less attention than any senior IMF or World Bank officials. It can even be said that most of the reporters are aimed at This old man over fifty years old came.

Due to the precedent of attacking the British pound and publishing provocative articles on the day of the devaluation of the Thai baht, Quantum Fund has been on the cusp for several months. Leaders in Southeast Asia refer to institutions like them as Predators attribute all the responsibilities of currency devaluation and economic regression to Soros and others. Even the Acting Prime Minister of Thailand declared unabashedly that if Soros entered Thailand, he would send the mafia to kill him, causing an uproar in public opinion for a while.

When Soros stepped into Hong Kong, the Hang Seng Index, as if it had been prepared in advance, recorded the largest single-day drop in recent months. Everyone wants exclusive interviews and big news.

  Originally, the meeting was scheduled to be held in late September, but the economic situation in Southeast Asia is getting worse. In view of this, the organizer responded to the call and rescheduled the meeting to early September. In addition to consulting with all parties as soon as possible to discuss the corresponding relief measures for various countries, there is also consideration of stabilizing the local situation.

Regarding Soros being invited to the meeting, the opinions of all parties are not consistent. Malaysian Prime Minister Mahathir declared: "This kind of currency transactions that are immoral, unhelpful to the economy, and disrupt the entire market should be banned and should not be allowed to exist. .” The implication is that Soros not only should not attack the currency systems of other countries, but even such currency attacks should be prohibited.

  Naturally, from a purely economic point of view, such remarks can even be classified to the point of ignorance. But from a political point of view, this kind of statement is righteous and beyond reproach.

  But not all those present at the meeting thought so. In fact, Mahathir’s remarks were at best to be heard by ordinary Malaysians in exchange for some approval ratings. In the eyes of professionals, Soros is praised as a politician and philanthropist.

  The climax of the meeting appeared in Soros' speech on how to stabilize the world economy. It is also ironic to say that a person who can be said to have single-handedly concocted the world economic recession is talking about stabilizing the world economy in front of the audience around the world. I really don't know whether it is the incompetence of the central bank governors of various countries or he is too arrogant.

  The speech was held in the auditorium of the Convention and Exhibition Center. Unsurprisingly, this auditorium, which can accommodate thousands of people, was packed with people, including reporters from all over the world. Soros was regarded as the focus of the press, and the content of his speech was even more exaggerated. He put aside the current currency crisis in Southeast Asia, and talked about his philosophical theories.

   “I believe that the enemy of the open society has always been the threat of capitalism, and that the idea of ​​laissez-faire, of letting the market run its course is very influential, but personally I think it’s an extremely dangerous approach.”

  As Soros, the "culprit" of the Asian currency crisis, said such a statement, it is actually hard to convince people. But he has another identity, that is, a philanthropist. In recent years, he has donated hundreds of millions of dollars to developing countries. It is these two contradictory identities that allow him to do a job with ease in front of the media.

After the so-called tirade, which was similar to empty words and clichés, Soros finally began to defend his behavior of shorting the Thai baht: "In fact, we noticed that there were problems in Thailand's economic development at the end of 1996. This kind of problem It was not caused by us, and it should not be solved by us, it is entirely within the purview of the Thai government."

“We are playing a guiding role in helping the Thai government choose the right policy. As you can see now, the serious consequences of the currency crisis have been revealed, and while this process may be driven by our funds, In fact, Quantum Fund’s short position in the baht is much smaller than everyone thinks.”

"About that article, the original intention was to urge the Thai government to choose the right strategy as soon as possible, but the market changes are far faster and more complicated than we imagined. The result is that today I have to stand on this stage to explain to everyone that we do not want to be with The Thai government is an enemy, and it has no intention of opposing the government of any country or region in Southeast Asia."

"Regarding the current currency crisis in Southeast Asia, according to my personal point of view, the time to short Southeast Asian currencies has passed. In fact, what can be revealed is that Quantum Fund is reducing the position of certain currencies. Therefore, some senior government officials do not need to panic too much .”

"Most importantly, although hedge funds played a specific role in this crisis, the general view on Wall Street is that a considerable amount of Asian capital has also joined in this currency crisis, although they don't know who the other side is. , but it is obviously inappropriate to blindly accuse Quantum Fund of its behavior.”

“It must be reiterated that, with regard to the currency crisis and the subsequent financial crisis, all the transactions involved are normal speculative behaviors and are not beyond the scope of legal permission. That is to say, all attacks on currencies are based only on A theory that the currency is potentially overvalued. Because of this, short selling against the currency can be seen as a correction to the value of the currency. We should get the credit, obviously they are not Think so."

  …

  After picking himself up clean, Soros did not take questions from reporters, but left quickly under the **** of security.

The last few speeches that could make the media "like a treasure" quickly made headlines in major financial media. In these conversations, Soros revealed a lot of information, including the Asian capital and currency crisis. And other remarks have become the focus of discussion. Although Soros did not answer reporters' questions, the information revealed in these words was enough for the market to react.

  Although the market’s analysis of the content of Soros’s speech is divided, at least from the perspective of Hong Kong, what is revealed between the lines is positive. After the sharp drop in early September, the Hong Kong stock market began to recover slowly. By early October, the Hang Seng Index stood firmly at 15,000 points. It seemed that the currency crisis had really passed.

As for Tian Yu Hong Kong Fund, due to the rebound in Hong Kong stocks, the position in the Hang Seng Index Futures was not closed in time, which eventually led to huge losses. Within a month, it spit out more than 500 million Hong Kong dollars in profits from the previous September, becoming the worst performer. fund.

   Despite this, Tianyu Hong Kong Fund still has a profit of nearly 200 million Hong Kong dollars. Based on the overall low view of red chips, their short positions on the Hang Seng Index have not been eliminated.

  In Tianyu Fund, Zhong Shi’s speech to Soros is just described in one word, that is “bullshit”!

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  (end of this chapter)