Volume 8 Final Chapter Chapter 1105 I am patriotic
The next day, as soon as the market opened, the Thai baht contract of SIMEX quickly rose from yesterday's closing price of "26.42" to "25.98", but the bears did not give up and continued to launch a fierce attack on the Thai baht from both markets throughout the day.
However, this time they encountered the joint intervention of two central banks. The Monetary Authority of Thailand and the Bank of Thailand joined forces to mobilize more than 12 billion US dollars of foreign exchange reserves, not only stabilizing the Thai baht within the fluctuation range, but even slightly increasing the quotation of the Thai baht in the spot market. The short-side speculative capital suffered a double blow, especially the main force, which suffered heavy losses.
Who is the main force on the short side?
Quantum Fund and Tiger Fund can be said to be brother funds. They have joined forces many times before and achieved fruitful results. This time, as soon as Quantum waved the flag, Tiger immediately followed.
At this moment, Tiger Fund was in trouble, big trouble - the overnight lending rate of Thai baht that Thai commercial banks lent to foreigners initially soared to 1000%, while Tiger Fund's previous channel became 1200%.
Julian Robertson had previously predicted that the Thai government would raise lending rates to deal with the impact on the foreign exchange market, and had made corresponding preparations. However, he never expected that the Thai government would dare to prohibit local commercial banks from lending funds to foreign speculators, which made his preparations come to naught.
Tiger Fund's original plan was to borrow a huge short-term loan from a local commercial bank in Thailand and sell it on the market.
This type of short-term loan is ultra-short-term, such as 7 days or 14 days. After the loan expires, the bank will borrow the corresponding amount of Thai baht from other banks to repay the previous Thai baht loan, and maintain its position through repeated cycles of borrowing and lending.
Generally speaking, the interest rates of overnight lending, 7-day lending, and 14-day lending show a gradual upward trend. Although the overnight lending rate is the lowest, it is impossible to short the Thai baht by borrowing overnight lending because the time is too short.
The 7-day and 14-day loans are very operational, and Tiger Fund can use this period of time to destroy the Thai baht.
Now it is impossible. Tiger Fund can no longer borrow rollover loans from local commercial banks in Thailand. If they want to maintain their positions, they must borrow Thai baht from multinational banks with Thai baht business at an interest rate of 1000% or even higher.
In the office of Tiger Fund, Julian was angry and asked, "How much have we lost in the futures market ?"
In addition to borrowing Thai baht, Tiger Fund, like other hedge funds that shorted the Thai baht, also shorted the Thai baht exchange rate contracts heavily. When Thailand announced two measures to deal with hedge funds, futures contracts responded immediately and Tiger Fund suffered heavy losses.
"Twenty-four million dollars."
Robert Setron, Head of Emerging Markets at Tiger Fund, was responsible for emerging markets at Fidelity Group, the world's largest fund company, for four years before becoming the Head of Emerging Markets at Tiger Fund. He has experienced many world-famous financial market events, such as shorting the Japanese market in 1990 and shorting the Mexican peso in 1994.
At SIMEX, LIFFE and IMM, Tiger Fund sold more than 700 Thai baht short contracts in total. The strong rebound of the Thai baht not only wiped out their previous profits, but also made them pay an extremely heavy price.
After Setron finished speaking, he looked at Julian cautiously and asked cautiously: "Should we stop loss and exit?"
"No!" Julian rejected the idea directly. "Not only will we not close our positions, we will also further increase our short selling efforts until Thailand admits defeat."
Despite the heavy losses, Julian didn't care. He was a patient man and a temporary setback would not shake his determination.
"But... according to our current position, the daily interest is a huge amount." Setron felt it necessary to remind Julian that based on the current interest rate for borrowing Thai baht, as long as the Thai baht is not announced to depreciate, their holding costs will be astronomical.
"How much exactly?"
Julian's face remained calm , as if he was talking about something that had nothing to do with him, but the slight trembling of his hands betrayed his true thoughts.
Setron picked up a pen and did some calculations on paper. After a few breaths, he looked up again. His face had turned very ugly. He stuttered and said, "If we want to maintain our position, the interest we have to pay every day is 13 million US dollars."
"so much?"
Although Julian was prepared, he still couldn't help being surprised when he heard the exact number.
However, he did not give up his determination to short the Thai baht. He just muttered, "It seems that we have to bring down the Thai baht as soon as possible."
Seeing that Julian had no intention of giving up, Setron could only shake his head and turn to do his own job.
The situation encountered by Tiger Fund is also happening to other hedge funds and commercial banks with no business in Thailand. All short sellers are aware of one problem: if they cannot break down the Thai baht in the next one or two days, it will be difficult for them to maintain their positions.
They have arrived at the bank of the Wu River. There are no elders from Jiangdong on the other side of the river. They can only fight with their backs to the river. Either the Thais die or they die. They will sell the Thai baht without scruples wherever they can.
Since Thailand has formulated measures, it has naturally thought about the situation that will arise once the measures are implemented. The Bank of Thailand is not immersed in the joy of defending the baht. The senior executives of the Bank of Thailand, led by Malakkanuan, are calling their allies, and the content of the calls is nothing more than "Brother, save me."
The relationship between Lijiaopo and Thailand can be described as a situation of mutual dependence. If the short side grabs the grass in Thailand, it will definitely hit the rabbit in Lijiaopo. Moreover, Lijiaopo has long wanted to become one of the world's financial centers, and its financial policies are very open. The methods that Thailand can use cannot be used by Lijiaopo at all.
Therefore, Hu Cidao from the Lijiaopo Monetary Authority did not wait for Mala Jianuan to call him, he took the initiative to call.
In addition to well-intentioned reminders, there was also practical assistance. Li Jiaopo organized another 600 million to 700 million US dollars, ready to support Thailand, its sworn brother, to the end and implement the so-called plan to aid Thailand in resisting the United States.
For Lijiaopo, the best situation is to keep the enemy out of the country and make them fail before the short-selling international hot money becomes stronger. After they are severely damaged, even if the international hot money still has evil intentions towards Lijiaopo, they will be defeated and flee to Singapore.
Mala Jianuan was naturally very grateful to Hu Cidao for his timely help. This was what a brother was.
…
For some large investment banks and funds, there will be more than one trading team and investment strategy. Although Nan Financial System is bearish on the Thai baht in general, it may be bullish on the details for a while.
Scarlett Fund has several investment managers who are bullish on the Thai baht in the short term. They worked together and keenly seized the opportunity of the baht's appreciation, used a little leverage, and made a small profit of more than 10 million US dollars.
As long as they maintain profits until the end of the year, they can get a generous year-end bonus.
For Southern Bank, although it does not have a branch in Thailand, its previous real estate plan in Thailand, its own loan plan, and Zhao Shixian's short-selling plan made it start accumulating Thai baht a few years ago. It now has a full 150 billion Thai baht in its hands. This is why Zhao Shixian is not panicking.
However, although from the perspective of the Nan Group as a whole, Nan Bank has the obligation to provide bullets to PY Securities, from an individual perspective, Nan Bank also has to take care of its own profitability. Therefore, the 150 billion baht did not all lie there and sleep, but took advantage of the opportunity of the overnight lending rate being raised to put the funds into the lending market to earn some interest.
In fact, Nan did not attach much importance to making profits from shorting the Thai baht in the spot/futures market. Even if he jumped out and acted as the main force of the short side and snatched Soros's position, and everything went well, the profit would be no more than a few billion US dollars, which was insignificant compared to Nan's plan to establish a base in Thailand.
Of course, this is relative. In fact, shorting the Thai baht is also part of Nan's Thailand strategy. Nan has a longer-term vision and is targeting the recovery period after Thailand's economic bubble is burst.
By simply analyzing the IMF's past practices, we can roughly infer the conditions for its loans to Thailand. Generally speaking, it is financial openness, market openness, and corporate bankruptcy openness. By opening up, Nan can divide his forces into two groups:
Along the way, it reorganized Wangmu Fruit Industry (Thailand) into a comprehensive group "Southern Thailand", appeared as a local Thai enterprise, and acquired high-quality small and medium-sized enterprises in Thailand that were on the verge of bankruptcy.
It has appeared as foreign capital all the way, merging and acquiring shares in Thai financial companies, opening a Thai branch of the Southern Bank, acquiring shares in local commercial banks, and following Thailand's policies to acquire as many shares as it can.
When the Thai government requires foreign investors to give up part of their shares, or stipulates that they will reduce their shareholding ratio after a few years when they acquire shares, Southern foreign investors can transfer all or part of their shares to the Southern Thailand Group.
In addition, when Thailand's economy is in recession and industrial development is stagnant, it will definitely turn its attention to agriculture, which already has great advantages. This is also something that the Nan family is happy to see.
In addition, there is real estate. In Bangkok alone, there are more than 10 billion US dollars worth of houses that have not been sold, and most of the mortgages, which account for more than half of commercial bank loans, have become bad debts. Revitalizing the real estate market is something the Thai government must do in the future.
To revitalize the market, one way is to expand domestic demand and the other is to attract foreign buyers.
If the Thai government wants to attract foreign investment in real estate, the only thing it can do is to relax the previous strict regulations on foreigners owning Thai real estate. In addition, it can continue to be ambiguous about the pornography industry, which has been determined to be illegal, and turn a blind eye to it, in order to stimulate the rapid development of Thailand's tourism industry.
The Southern Thailand Group is a local Thai enterprise. In theory, its interests are aligned with those of the Thai government. It is the Southern Thailand Group's obligation to help solve the problem of unsold houses. Amid all the enthusiasm and hardship, it is only natural that it should earn a profit of just one or two billion US dollars.
The maximum profit is this much, it cannot be more. If the actual amount exceeds this figure, it must belong to foreign investors. As a local enterprise, Tainan Group is naturally patriotic.
