The Son of Finance of the Great Age

  Chapter 303 Issue 4: Skyrocketing lending rates (Part 1)

According to the length of the loan, the interest rate can be divided into many types. Generally speaking, it can be roughly divided into three types: annual interest rate, monthly interest rate and daily interest rate. The annual interest rate can be divided into one year, two years, three years and five years. The monthly interest rate is divided into January, February, etc. to June, and the daily interest rate can be divided into overnight, seven days, 14 days, etc.

  The Hong Kong Monetary Authority is very clear about the method used by speculators to attack Hong Kong dollars. It is nothing more than borrowing Hong Kong dollars from banks with Hong Kong dollar business, and then selling them in the market to convert them into U.S. dollars, and then borrowing them to earn interest in U.S. dollars. If the Hong Kong dollar falls, they can make a lot of money by using the exchange rate difference before and after the depreciation, and if the Hong Kong dollar is safe, they can also use the interest on the U.S. dollar to make up part of the interest rate difference and minimize the loss.

How to put an end to this kind of attack on the Hong Kong dollar, there are no more than two methods. The first is to prevent speculators from borrowing Hong Kong dollars in the market and cut off the possibility of their borrowing from the source. It is the same reason that the Thai government once banned local banks from lending Thai baht to speculators. It's just that this method doesn't work in Hong Kong. Hong Kong's financial market is far more developed than Thailand's. Most banks in the world have branches in Hong Kong. At the same time, Hong Kong's economic marketization is the most developed in the world. Therefore, this Such an administrative order that seriously violates marketization cannot be implemented.

  Then there is only the last way to crack down on international speculators, which is to raise the financing costs of speculators. Because these Hong Kong dollars are generally short-term loans, the ultra-short-term interest rate based on the overnight lending rate becomes the cost of these funds. To raise their financing costs, you only need to increase the overnight lending rate.

  After intense discussions, Ren Yigang and his colleagues decided to raise the overnight lending rate. No one objected to this decision, after all, the threat of international speculators was at hand. The focus of the discussion is the range and duration of the lending rate. Although the lending rate is calculated according to the number of days, the range and time can affect other interest rates in the market.

After a heated debate, the executives of the HKMA and the officials of the Financial Secretary decided to announce at 8 o'clock in the morning on October 23 that the inter-bank overnight lending rate will be raised to 300% for a temporary period of time. It is scheduled until the weekend, but the specific situation is not sure, depending on the situation of the Hong Kong dollar in the foreign exchange market.

Just the day before, the overnight interest rate in the inter-bank lending market was only at an annualized level of 7%. This figure fully increased the lending rate by as much as 43 times, which meant that the Hong Kong dollars lent by international speculators paid 100% a day. The interest is 43 times more than usual.

For example, the original 6 billion Hong Kong dollar spot sold by international speculators in the market is about 46.4 billion Hong Kong dollars when converted into Hong Kong dollars (exchange rate 7.74). Calculated according to 360 days a year (international practice), if the lending rate is 7%, Then the interest that speculators have to pay after holding for a week is more than 63 million Hong Kong dollars. In the face of the current high lending rate and the holding time remains unchanged, the interest figure will become 2.7 billion Hong Kong dollars.

  For international speculators to make up for this loss, they need to repurchase Hong Kong dollars at a price of at least 8.17 Hong Kong dollars for 1 U.S. dollar in the foreign exchange market. This is simply impossible, because when Hong Kong dollars were issued, they were guaranteed at a minimum of 7.8. Unless it is the depreciation of the Hong Kong dollar, it is absolutely impossible for a figure below this price to appear.

In fact, it doesn't even take a week, maybe only about three days, to make their average holding cost exceed 7.8 when the Hong Kong dollar was issued against the U.S. dollar. At that time, they will be unable to break through the defense of the Hong Kong dollar, and they will have to endure the interest from the Hong Kong dollar. Huge losses in the field, so the whole situation of attacking the Hong Kong dollar will be self-defeating.

After Ren Yigang listed all the pros and cons with detailed figures, the other executives stopped talking, and only Vice President Shen Liantao said worriedly: "If you rashly increase the lending rate by such a large amount, there may be huge losses in the stock market." Shake it?"

"Where is the time to think about the stock market now? If the exchange rate of the Hong Kong dollar is not maintained, the stock market will follow suit. Besides, it is not up to us to intervene in the performance of the Hong Kong stock market. Even the financial secretary has no authority and methods, and can only resign himself to fate." I believe investors will understand our painstaking efforts." Ren Yigang said impatiently, dissatisfied with Shen Liantao's foresight and foresight.

  Hearing what the big boss said, Shen Liantao naturally stopped making fun of him, so he shut his mouth and said nothing.

Seeing that the opinions of all parties have been settled, Ren Yigang nodded in satisfaction, and then said to the staff: "Immediately convey the order to the banks and other institutions to shrink money. This time, I will make the international speculators lose their money." The people below agreed One sound, and then go out to do things.

   Soon, the large commercial banks received a notice from the Monetary Authority to raise the lending rate, and then the entire capital market knew the news. At this time, there is not much time before the opening of the trading session in the morning. The first reaction of many Hong Kong stock market analysts after hearing the news is that all the previous preparations were in vain. Today's market crash is inevitable.

  The market was shocked!

   Sure enough, the Hang Seng Index opened at 11,083 points after the bidding stage, which was a full drop of 550 points from the previous trading day, and it gapped and opened lower. This news, coupled with the gap in the Hang Seng Index, made the entire market panic to the extreme.

"The Hong Kong dollar is going to end!" "International speculators are madly attacking the Hong Kong dollar!" "Hong Kong is going to end!" All kinds of rumors began to flood the market. Sell ​​the stocks in your hands, no matter what type, as long as there is a possibility of selling, urge the broker to make a deal as soon as possible.

  …

   "Exactly what we wanted!"

Julian Robertson didn't rest all night. The Tiger Fund he led sold more than US$1 billion of Hong Kong dollars in London during the daytime yesterday, leading the speculators to attack frantically. Hong Kong has been greatly surprised.

   Soon, the Monetary Authority's offensive method came, and the lending rate was greatly increased. Didn't you know that this was in the hands of speculators, and Hong Kong stocks plummeted in panic, which made speculators pre-set short-selling futures to reap huge profits.

"Buy the stocks we are shorting and close out these positions!" Julian Robertson felt that the time was ripe enough. If the heavyweight shares are included in the account, it can lower the average price of their investment portfolio before.

Following his order, the staff of Tiger Fund began to get busy again despite the exhaustion of staying up all night. These trading orders do not need them to complete in person, they only need to call the brokerage in Hong Kong and let them enter the market. That's it.

  …

  Song Ling spent another ridiculous night. When he got up, his head hurt so much that he wanted to knock it off. Just when he vowed that he would never live in such a luxurious life again, an emergency call woke him up from his hangover state: the lending rate has risen sharply!

At this time, Song Ling couldn't care about the pain in his head. After tidying up for a while, he immediately returned to the company. At the same time, he kept in touch with the people from the rescue fund. Stay on the market and don't let the market crash.

  The biggest test for the Hong Kong market has finally come, Song Ling thought in the taxi.

  …

  Five minutes after the Hang Seng Index opened low, the market poured in a large amount of funds and began to sweep goods in all directions. Among them, heavyweight stocks became the focus of trading. With the support of this stock, the Hang Seng Index miraculously began to rebound. In just ten minutes, the Hang Seng Index actually rose instead of falling, and once climbed to 11203 points, a full rise of 120 points. The short-term analysts were stunned by this performance against the market.

Soon, the analysts understood what was going on, and they started calling their acquainted brokers like crazy, asking them to ship as soon as possible, because there was supporting funds in the market, so they did not take advantage of the high price to escape , I'm afraid there will be no chance in the future.

  Analysts generally believe that there are funds supporting the market, hoping to change the sentiment of the market in the shortest possible time, and then support the entire market. What they don't know is that the international speculators have achieved their goals at this time and started to buy back heavyweight stocks in the market to cover their positions to close out their previous short positions. This is a stock of funds. The other fund is the Chinese fund to support the market, and this is the real main force to protect the market.

  Although the two are mixed together, they are both buying stocks. It can also be said that the power is exerted in one direction, which is why the Hang Seng Index did not fall but rose in such a short period of time.

Although the analysts don't know the inside story, it doesn't mean that their judgment is wrong, and these analysts wandering in the market decisively seized the opportunity of this rebound and asked the broker to sell the stock. At this time, they only had one idea, Take advantage of this opportunity to make less losses, and no longer have the idea of ​​making money.

  Stock brokers are even more crazy, almost non-stop calling customers to tell them the current situation and let investors make decisions in the first time. Therefore, when they heard that the market had plummeted but they had funds to sweep the goods, most investors chose to clear their accounts, and they could only listen to the advice of their brokers in a hurry.

  This kind of nationwide selling caused the market to fall again, and the speed was much faster than before. International speculators had no objection to this, and they even hoped that the market would fall even more so that they would earn more, so they quickly stopped absorbing chips. At this time, the pressure of the entire market fell on the shoulders of Huafang's support funds, but how can the pressure of the entire market be leveraged by people like Song Ling? Therefore, after a brief rise, the broader market fell at a faster rate, and fell below 11,000 points in almost half an hour.

  …

   "10500, 10400, 10300, 10000 points, it seems that this number can't be kept!" Zhong Shi yawned, looking at the long red line on the computer screen, and said casually.

  Looking at the foreign exchange market where you come and go and fight endlessly last night, he is seriously lacking in spirit now. Although he took a nap in the morning, he was awakened by the loud noise outside.

   "The Monetary Authority raised the lending rate?"

Zhong Shi muttered a few times, then lay down on the seat, closed his eyes, and said casually: "Today's market must not be good, just watch, I don't know what it will look like." Then he fell into a drowsy sleep, let Ma Jiarui on the opposite side was speechless for a while.

It's just that Zhong Shi's recovery didn't last long, and he was awakened by the thunderous cheers outside again. He looked out of the office with hatred, then lit a cigarette, and after clearing his mind, this Only then did I start to look at the market of Hong Kong stocks.

Outside, at the trading floor of Tianyu Fund, everyone was shocked. Although they all knew that the skyrocketing lending rate was a huge negative for the stock market, such a drop still far exceeded their imagination.

  Now there are only 10,000 integer points left. If it falls below this number, then no one can imagine the lower limit of today's Hang Seng Index!

Different from the cold, ruthless and hopeless market, at this time, almost all employees of Tianyu Fund were full of enthusiasm. Most of them followed Zhong Shi's advice and shorted some stocks in the Hong Kong stock market or The more the stock index futures fall now, the more profitable they will be.

   Thanks to the book friends who voted for the monthly ticket!

  (end of this chapter)