Chapter 317 Pitting Soros

   Soros is indeed doing more, when the second wave of the Asian currency storm blows.

  When the currencies of the entire Asian region continued to fall, Soros dared to risk the world's bad opinion and go long. Could it be that this well-known fund manager had a brain problem?

   Obviously, there is nothing wrong with his possibly the most valuable head in the world. Even if something goes wrong with him, Druckenmiller is still considered extremely smart in the industry inside the Quantum Fund, and the probability of two people having problems with their heads at the same time is almost negligible.

In fact, what Soros said at the World Bank Annual Meeting in Hong Kong about the end of the currency crisis was not empty talk, but he really thought so, at least for the currencies of some countries, Soros It is true that they have successfully avoided a currency crisis.

   For example, Indonesia and Rupiah.

  Since the last meeting in Washington, Soros and Julian Robertson have parted ways, each responsible for a region. This division of labor is not absolute. In fact, there are people on both sides who are watching each other's actions closely. If there is an obvious opportunity for speculation, they will step in in time.

   It seems that the impact on the Hong Kong dollar and the Hong Kong stock market, Soros's Quantum Fund is also involved, but the position is not too large. Compared with the position of the Tiger Fund, it can only be regarded as a small fight. After all, this time the attack on the Hong Kong market was led by Tiger Fund and its gangsters, and it was obviously inappropriate to usurp the host. Therefore, the two sides tacitly maintained each other's leading position in their respective attack plans.

   As for reputation, to be honest, Julian Robertson doesn’t care. In fact, his reputation in the European and American investment circles is no less than that of Soros, and he is also very happy to let Quantum Fund and Soros lead the way to attract gunfire.

  Soros’ optimism on the Indonesian rupiah is not accidental. He and Quantum Fund have been paying attention to the performance of Southeast Asian currencies since the collapse of the original monetary system, including the Thai baht, the Philippine peso and the Indonesian rupiah, especially the Indonesian rupiah.

After the Thai baht crisis broke out, the currency crisis quickly spread throughout Southeast Asia. The Philippine peso, Malaysian ringgit, Indonesian rupiah and other currencies have depreciated one after another. Several countries with open capital accounts have successively abandoned the fixed exchange rate system and turned to currency float freely in the market.

  I have to mention Indonesia here. This country is quite strange. In the 1970s, the capital account was opened before the current account account was opened, and the capital flowed out when the capital did not flow in. That is to say, the free circulation of capital has been realized without free trade in goods, and overseas investment has taken the lead in the absence of foreign capital investment, which is extremely rare among Southeast Asian countries.

  There is only one reason for this difference, that is, Indonesia is an OPEC country rich in oil and far richer than other Southeast Asian countries.

  After experiencing the oil crisis in the 1970s, the Indonesian government (oil and natural gas is state-owned) was so rich that it naturally couldn't wait to open up its capital account and allow Indonesian rupiah and US dollars to circulate freely.

  Since the currency crisis broke out in Southeast Asia, the Indonesian government took the lead in responding by allowing the Indonesian rupiah to depreciate freely in the market. Since Indonesia's domestic economic problems are not too serious compared with other countries, and the Indonesian rupiah is backed by huge oil resources, the Indonesian rupiah depreciated by 11% one after another and then stabilized.

   At this time, Soros chose the Indonesian rupiah because he found out a very important news, which is enough to restore the Indonesian rupiah to the level of 1 US dollar to 3,000 rupiah in the medium and long term.

According to internal information, the International Monetary Fund will implement a rescue plan for Indonesia in the near future. The specific content of this plan includes: the Indonesian government will shelve large-scale infrastructure projects with a total value of up to 13 billion U.S. dollars, and the IMF will provide multilateral financing with a total value of up to 23 billion U.S. dollars. The rescue fund requires Indonesia to close 16 financially problematic banks and relax some control measures, including cutting import taxes, providing export incentives, and opening distribution and wholesale markets to foreign manufacturing companies operating in Indonesia.

  In fact, the negotiation between the Indonesian government and the IMF has been going on, and the market is paying close attention to it. On October 26, the negotiators of the International Monetary Fund flew back to Washington from Jakarta to conduct further discussions with the IMF’s board of directors on the aid plan to help Indonesia get rid of the financial crisis and restore investor confidence. The final decision on the aid plan will be made in the next few days. announced within days.

   And Soros' deep throats got definite news before the announcement, that is, the IMF will approve this plan.

The current market quotation for Indonesian rupiah is around 3,600 rupiah per US dollar. This is still a short-term effect caused by the sharp drop in the Wall Street stock market. Once the news of the IMF’s assistance to Indonesia is announced, it is believed that the Indonesian rupiah will skyrocket in the short term. At the same time In the foreseeable future, the market will regain confidence in the Indonesian rupiah.

   This is why Soros wants to be long on the Indonesian rupiah.

  According to Quantum Fund’s internal estimates, the Indonesian rupiah will appreciate by at least 20% in about half a year to a year, which is quite a conservative estimate. A position of 2 billion US dollars means a profit of at least 400 million US dollars. This figure means a 2% return on the size of the entire Quantum Fund, which is a rather terrifying figure.

   Quantum Fund with a total management fund scale of up to 20 billion U.S. dollars, even if the income is 1 percentage point, it means 200 million U.S. dollars in the account. In fact, there is very little room for 20 billion US dollars to operate in the market, so Soros' Quantum Fund is divided into several sub-funds, targeting various capital markets around the world, such as London, New York, Tokyo, Hong Kong, Frankfurt, etc., will not let go A potentially profitable investment opportunity.

  Naturally, the current Indonesian market has become Soros' next target.

   It’s funny to say that Soros has been playing the biggest short role in the market when he destroyed the fixed exchange rate systems of countries such as Thailand and the Philippines. But before the flames of war in Southeast Asia caused by him have completely dissipated, Soros has transformed himself into a bullish side.

   To say that this kind of rapid change of position will inevitably surprise some moral gentlemen. Before Soros, he had quarreled with politicians from certain countries in Southeast Asia. But in the business world, this situation is too common. As long as there are interests, there is no morality at all.

   Now there is only one problem left, that is, the liquidity of the Indonesian rupiah is really insufficient. Although Indonesia has opened up the current account, the control on foreign manufacturing companies is quite strict, and in terms of the capital account, there is a net inflow of US dollar funds. In a word, due to various reasons such as the economic system and its own industrial base, the foreign exchange market transactions in Indonesian rupiah are quite underdeveloped.

  And with the outbreak of the currency crisis, the entire Indonesian banking industry, including foreign banks, has been warned by the Suharto government, so they are quite cautious in lending. After all, no one wants to offend the dictatorial Suharto government.

  Soros could not acquire a full amount of positions in the foreign exchange market, so he could only find some super banks in Asia, hoping to buy enough Indonesian rupiah from them, and Asian super banks like HSBC received the commission.

   HSBC is naturally not a fool. Buying Indonesian rupiah at such a sensitive time has its own problems, not to mention that the other party is the famous Quantum Fund. The people at the Indonesian branch and the head office decided that there must be a major problem, and they were naturally unwilling to act as opponents. Because Zhongshi, who borrowed a large amount of Indonesian rupiah in the Indonesian market some time ago, fell into the sight of HSBC executives among.

"Zhong Sheng, if you want to trade your loan in currency, the value of the Indonesian rupiah has depreciated a lot. It doesn't seem worthwhile now. Why don't you just throw it away and clear it now? Or exchange it into US dollars. The interest rate on the US dollar is still low. Higher." Lin Legeng racked his brains and finally came up with a feasible reason for Zhong Shi.

   It’s just that this reason is quite far-fetched, because Zhong Shi can only lose part of the interest at most. The term of his loan is a full year, that is, until July of 1998, and he deliberately ignored the exchange rate risk in the exchange process.

  After Lin Legeng finished speaking, he couldn't believe the nonsense. It's just that he was very thick-skinned, and he didn't show the slightest bit of guilt. Instead, he looked at Zhong Shi eagerly, waiting for Zhong Shi to give an answer.

   "Is that so..."

Zhong Shi rubbed his smooth chin and thought for a long time before he said slowly: "Actually, I don't have to keep this loan in my hand. Since you said so, I can consider it, but the exchange rate may be lower than the market. The exchange rate is slightly higher."

  At this time, the exchange rate between the Indonesian rupiah and the US dollar is around 1:3600. Although the market fluctuates, the range is not very large. It has to be said that the Indonesian government's choice of active depreciation has kept the Indonesian rupiah relatively stable to a certain extent.

"This?" Lin Legeng made a face, frowned and thought for a long time, and then carefully tested: "I don't know what your psychological price is? I can ask the Quantum Fund. If the range is not very If it is big, we have the possibility of cooperation.”

  He knew that he couldn’t hide his careful thinking from Zhong Shi. Even if he thought about it with his toes, a fund manager who can handle hundreds of millions or billions of dollars in funds would not ignore exchange rate fluctuations when buying and selling currencies.

   "3500, it can't be lower." Zhong Shi was waiting for this sentence. As soon as Lin Legeng said the words, he quickly interjected.

Zhong Shi’s funds were borrowed with the same amount of U.S. dollars as a guarantee. The exchange rate at that time was about 3,000 Indonesian rupiah to 1 U.S. dollar. Later, with the depreciation of the Indonesian rupiah, he successively bought them in the foreign exchange market. For one thing, he now has a face value of 7 trillion Indonesian rupiah on hand.

  Exchanged at this exchange rate, it is almost 2 billion U.S. dollars, which is just a round number for easy calculation, Zhong Shi thought so wickedly.

"Can it be lower?" Lin Legeng's face was almost wrinkled into a chrysanthemum, and anyone who saw him would feel a little sympathy for him, but in fact, he was very happy at this time, because Quantum Fund gave them The quotation is 1:3520/30, which is basically the same as that of Zhongshi, and the exchange rate difference in the middle is almost negligible.

   Even so, Lin Legeng still stubbornly bargained with Zhong Shi, but Zhong Shi always insisted on this price. Lin Legeng tried a lot of words, but in the end he couldn't convince Zhong Shi, so he could only accept the price. When signing the agreement, an old face looked ugly as if both parents had just died.

   No, maybe even uglier than the death of both parents.

  After Lin Legeng said goodbye and left, Andrew walked over frowning. He knew that Zhong Shi didn't want to be disturbed when he was doing business, and generally he wouldn't listen to other people's opinions, but this matter was no small matter, so even if he received a few reprimands, he had to analyze the situation clearly to Zhong Shi. After walking to Zhong Shi, Andrew took a look at Zhong Shi first, and then persuaded him worriedly: "Zhong Sheng, are you really bearish on the Indonesian rupiah? You must know that there have been many rumors about the Indonesian rupiah in the market recently, including... "

"I know!"

   Zhong Shi interrupted Andrew's words, without any expression fluctuations on his face, and Andrew was puzzled for a while. But half a day later, Zhong Shi suddenly burst out laughing with a "puchi". First he sneered complacently, and then his laughter became louder and louder, revealing a sense of hearty pleasure.

"There are not many opportunities to pit Soros. Who would have thought that I would meet one? How could I let it go? Hahaha... Soros thought he had inside information, but he didn't understand politics or the Suharto government. a ha ha ha…"

  A black line appeared on Andrew's forehead, and he couldn't understand what Zhong Shi was saying at all. He was concentrating on whether to see a doctor to see Zhong Shi, who had already laughed so hard that he even burst into tears.

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  (end of this chapter)