Chapter 501: Orient Express and the Crisis Made a Net Profit of $650 Million!

Starting from late June, Li Xiaofan, Zhou Xiaoqing, Wang Danrong and other core investment team members simply moved their office to Bangkok, Thailand.

They set off from Singapore and took the "Asian Orient Express".

"Asian Orient Express" is a luxury train that travels between Bangkok and Singapore. It is not a hotel, but it is better than a mobile luxury hotel.

The Asian Orient Express departs from Singapore and passes through several stations including Kuala Lumpur, Penang, Hua Hin, Thailand, and finally arrives in Bangkok.

This is a rare luxury express in Asia. It was opened in 1993 and is the Asian version of the European Orient Express. The luxurious, comfortable and leisurely experience makes passengers feel like they are on a time machine and back to 18th century Europe.

Although the whole journey takes more than 50 hours, there is no boredom on the journey. The window is full of strong Southeast Asian style. You can see the city scenery of Thailand, the large rice fields and stilt houses in Malaysia, as well as natural jungles, tropical rainforests and lakes. The scenery is spread out like a scroll.

The beds on the train are naturally very comfortable, and the food is also rich. You can enjoy the scenery while eating, or chat with friends while drinking coffee.

Such a luxurious train is of course not cheap. The most ordinary standard compartment costs 5,000 US dollars for a two-day journey. According to the exchange rate at the time, it is roughly equivalent to more than 40,000 RMB, which is difficult for ordinary people to afford.

Wang Danrong reported to Li Xiaofan on the train: In May, after the Thai authorities repelled the second wave of attacks by the Quantum Fund, the Bank of Thailand issued new market management regulations on June 2, requiring Thai financial institutions to stop currency swap transactions, interest rate option transactions, forward foreign exchange transactions and foreign exchange option transactions. In addition, the Bank of Thailand requires Thai financial institutions to report foreign exchange transactions in detail every day and keep relevant foreign exchange transaction bills.

These measures by the Thai authorities directly blocked various financial derivatives used by international speculators to raise Thai baht, which was equivalent to cutting off the firewood from the bottom of the pot. The initial effect seemed very good.

However, these regulations involved too many aspects, not only affecting international speculators like Soros, but also all foreign investors investing in Thailand, causing an uproar.

As a result, slogans such as demanding the then prime minister to step down appeared on the streets of Bangkok, Thailand. The new Thai government had not been in power for long and its position was not yet stable, and the political situation in Thailand was unstable...

Before arriving in Bangkok, Li Xiaofan and his investment company in Thailand had already made a move to buy US Treasury bonds with the US dollar deposits previously borrowed from Citibank in the United States, and mortgaged it to the Bank of Thailand, lending nearly 2.5 billion baht.

Subsequently, the borrowed baht was sold in the foreign exchange spot market one after another, and 100 million US dollars were bought at an exchange rate of 25:1.

At the same time, short-selling Thai baht foreign exchange futures and stock index futures.

When Li Xiaofan and his team arrived in Bangkok, foreign institutions such as Soros's Quantum Fund were rapidly mobilizing global media forces to publicize the ignorance and danger of the financial management measures of the Thai central bank, and at the same time spread rumors that the head of the Thai Ministry of Finance was going to step down, causing an uproar and criticism in Thailand.

At the same time, Soros and others once again sold a large number of Thai baht in the foreign exchange market, and the Thai foreign exchange market fell into a turbulent situation again.

On June 19, under pressure from public opinion, Thailand's Deputy Prime Minister and Minister of Finance and the head of the Ministry of Commerce resigned.

After this market rumor was confirmed, international speculators sold off the Thai baht. On the same day, the Thai baht quickly fell to 28 baht per dollar, and the Thai stock market also fell sharply by 5%.

At this time, Thailand was in chaos.

Soros and others continued to launch the final fatal blow to the Thai baht. International speculators led by Quantum Fund continued to sell a large number of Thai baht. The Bank of Thailand struggled to support the Thai baht exchange rate, and consumed US$5 billion in foreign exchange reserves in more than ten days.

On June 28, Thailand's foreign exchange reserves were reduced to US$2.8 billion, and its intervention capacity was almost exhausted...

On June 30, 1997, it was a sleepless night. Li Xiaofan and a group of Chinese colleagues and friends watched the live broadcast of the handover ceremony of Hong Kong Island's return to the motherland in the living room of his big villa.

At 23:59 in the evening, the British flag and the Hong Kong flag fell, and Britain's one and a half centuries of colonial rule in Hong Kong Island came to an end.

At midnight on July 1, 1997, the Chinese national flag and the Hong Kong SAR flag were slowly raised together in the majestic national anthem.

Experiencing this sacred moment again, Li Xiaofan and a group of friends were still in tears...

But the next day, on July 2, the Bank of Thailand, forced to announce that it would abandon the current exchange rate system and implement a floating baht exchange rate system.

Since the Bank of Thailand gave up the practice of buying baht to maintain the baht exchange rate, the baht exchange rate fell by 20% that day.

For a time, banks suffered a run, financial institutions collapsed in batches, and the whole of Thailand fell into an economic crisis...

On July 23, the baht fell sharply again. The exchange rate of the baht to the US dollar once dropped to 32.10 baht to 1 US dollar, reaching the lowest point since the devaluation of the baht on July 2. At the close of the foreign exchange market, the quotation was 31.30 baht to 1 US dollar.

At this time, Li Xiaofan and his team had already made a book profit of about 20 million US dollars in exchange for 2.5 billion baht borrowed before.

But more profits come from the huge profits from shorting Thai baht foreign exchange futures and stock index futures.

Under the influence of the fluctuation of the Thai baht, the Philippine peso, the Indonesian rupiah, and the Malaysian ringgit have successively become targets of attack by international speculators such as Soros.

In August, Malaysia gave up its efforts to defend the ringgit. The Singapore dollar, which has always been strong, was also hit. Although Indonesia was the last country to be "infected", it was hit the hardest.

In late October, international speculators moved to the international financial center of Hong Kong, and pointed their spearheads at the Hong Kong linked exchange rate system. The New Taiwan dollar exchange rate suddenly depreciated by 3.46% in one day, increasing the pressure on the Hong Kong dollar and the Hong Kong stock market.

On October 23, the Hong Kong Hang Seng Index fell 1,211 points.

On the 28th, it fell 1,621 points and fell below the 9,000-point mark.

In mid-November, a financial crisis also broke out in South Korea.

On November 17, the won-dollar exchange rate fell to a record 1,008:1.

On November 21, the South Korean government had to seek help from the International Monetary Fund and temporarily controlled the crisis. But by December 13, the won-dollar exchange rate fell to 1737:1.

The won crisis also hit the Japanese financial industry, which had a large investment in South Korea.

In the second half of 1997, a series of Japanese banks and securities companies went bankrupt.

The Southeast Asian financial crisis evolved into the Asian financial crisis...

Starting from June 1997, Li Xiaofan led his investment team to do one thing: short selling!

They shorted the stock indexes and foreign exchange futures of Asian countries and regions one by one!

In early 1997, Li Xiaofan pledged his shares in American companies such as Yahoo and Pacific Online Bookstore to American banks such as Citi and Wells Fargo, and borrowed $200 million in cash.

By November 1997, the $200 million had turned into $850 million, with a net profit of $650 million!