Chapter 394 Foreign Exchange Arbitrage Opportunities and Ideas Change the Pattern of Lithography Machine Process
After a few pleasantries, Li Xiaofan and Louis Bacon chatted about their views on the current Internet and emerging industries. When Louis Bacon learned that Asia's first online bookstore project founded by Li Xiaofan was listed on Nasdaq, he couldn't help but admire the young man from mainland China in front of him.
After getting acquainted with him, Li Xiaofan asked him abruptly:
"Louis, what do you think about the arbitrage going on between the yen and the dollar or the baht?"
After hearing this, Louis Bacon was surprised: "Li, are you also concerned about foreign exchange arbitrage trading?"
Li Xiaofan asked this question because it was already the middle of 1996 and there was still one year left before the 1997 Asian financial crisis. He wanted to make some preparations in advance.
In his previous life, when Li Xiaofan was studying in the EMBA program at Tsinghua University School of Economics and Management, one of his group research cases was: the causes of the 1997 Asian financial crisis.
Before the Asian financial crisis in 1997, some Japanese and foreign investors, including Japanese banks and various domestic and foreign hedge funds, used foreign exchange arbitrage transactions to make large inflows and outflows in Southeast Asian countries, which became an important inducement to the outbreak of the financial crisis.
The current method used by speculators to use Japanese yen arbitrage trading is usually to borrow Japanese yen at very low interest rates and invest in US dollars or Thai baht to obtain higher interest rates than Japanese yen. If the Japanese yen depreciates against the U.S. dollar, then you can obtain superimposed double benefits: spread income + exchange income.
In order to prevent deflation in Japan, the Bank of Japan pursued a low interest rate policy in the mid-1990s. This is nothing short of a godsend for those who want to get involved in Forex arbitrage trading.
From 1995 to 1998, the spread between the U.S. federal funds rate and the Bank of Japan's target rate was approximately 5%.
Someone has made statistics and found that the average spread income through Japanese yen foreign exchange arbitrage trading during this period was approximately US$13 billion per year.
During the same period, the Japanese yen depreciated by nearly half against the U.S. dollar. According to conservative estimates, investors in the yen arbitrage trade received about US$169 billion in "pie from the sky" in the three years from 1995 to 1997.
Short-term arbitrage investors pulled capital out of Japan and invested in emerging Asian markets, ultimately earning huge profits.
The large amount of funds flowing from Japan to its Southeast Asian neighbors, as well as the attraction of these emerging markets themselves, jointly created the economic bubble in Southeast Asia before 1997...
Louis Bacon smiled and said: "Li, this is a very good arbitrage opportunity. Many of my hedge fund friends and other short-term arbitrage investors are currently happy to use the Japanese yen for foreign exchange arbitrage transactions. If you have enough If you obtain enough yen loans from Japanese banks, you can also try to conduct arbitrage transactions in this area. At present, the profits are very considerable..."
After hearing this, Li Xiaofan thought for a moment. He currently has no projects in Japan, so how can he get a Japanese yen loan?
The only project related to Japan is the Yahoo Japan project led by SoftBank Group in which I participated in the investment.
Another solution is to cooperate with SoftBank Group on its own Pacific Online Bookstore project and open a branch in Japan.
You can talk to Lao Suntou about this matter next time.
Li Xiaofan suddenly thought that Sun Zhengyi was just lucky! From 1995 to 1997, the Japanese yen depreciated by nearly half against the US dollar. So during this period, Masayoshi Son's SoftBank Group obtained huge loans from Japan and invested in the United States. Even if he did nothing, he was "making money" invisibly...
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The night before leaving the United States, Li Xiaofan and Zhu Min signed a memorandum of investment in the WebEx project. In the end, the post-investment valuation of the project agreed upon by both parties was US$3.3 million. Li Xiaofan invested US$990,000 and obtained 30% of the shares.
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The morning after Li Xiaofan and his party arrived in Eindhoven, the Netherlands, they attended the company's shareholders' meeting at the ASML headquarters.
Li Xiaofan met William Maris, the CEO of ASML, face to face for the first time. He was the second CEO of ASML after the first "ruthless man" Jat Schmidt.
William Maris briefly introduced the development history of ASML to Li Xiaofan and other shareholder representatives from around the world at the shareholders' meeting.
William Maris said that when ASML was separated from Philips in 1984, there were 10 photolithography machine manufacturers in the world, including ASML, but 5 of them had no core technology at all. There are four opponents that deserve to be taken seriously.
The four companies are: PERKINELMER and GCA in the United States, and Nikon and Canon in Japan.
Before 1991, ASML suffered heavy losses and relied on the continuous investment of Philips and the "blood transfusion" of subsidies from the Dutch government to survive.
William Maris said that the biggest turning point occurred five years ago. ASML's R&D engineers overcame many difficulties and finally delivered an epoch-making product in 1991: PAS 5500.
This photolithography machine model PAS5500 has achieved great success after it was successfully developed and put on the market. This machine quickly occupied the market as soon as it was launched. ASML finally reversed years of losses and achieved sustained profits. The company's shares were listed on the NASDAQ in the United States and the Dutch Stock Exchange at the same time last year.
ASML quickly became one of the three industry giants along with Nikon and Canon of Japan, and defeated PERKINELMER and GCA of the United States.
William Maris proudly introduced that after the two American lithography machine companies PerkinElmer and GCA were defeated by them, Zeiss's lithography lenses could only be sold to ASML, which just relieved the company's pressure of insufficient lithography lens production capacity. It was really like a divine help!
Currently, there are only three players left in the global lithography machine market: Nikon, the boss, Canon, the second, and ASML ranked third.
After the formal shareholders' meeting, when chatting privately with shareholders, William Maris said with confidence:
"The next step for our ASML company is to defeat the two Japanese companies in front and strive to become the world's boss!"
Looking at the complacent William Maris, Li Xiaofan suddenly thought of a Chinese: Dr. Lin Benjian.
In his previous life, Dr. Ben-jian Lin, who joined TSMC in 2000, invented a series of breakthrough innovations, pioneering the immersion lithography method, which revolutionized the manufacturing process of integrated circuits and enabled the feature size of advanced semiconductor chips to continue to shrink to the micro-nanometer level.
It was this invention of Dr. Ben-jian Lin that helped ASML defeat Nikon and Canon of Japan and become the world's leading lithography machine company.
Li Xiaofan was thinking about what the global lithography machine market would look like if he could recruit Dr. Ben-jian Lin to work under him in advance?