Chapter 511: The First Battle to Defend Hong Kong's Financial Sector in August

The stock price of Pacific Online Bookstore controlled by Li Xiaofan also performed well.

After New Year's Day in January this year, under the uncertain economic situation, Pacific Online Bookstore controlled by Li Xiaofan acquired Popular Bookstore at a low price of 40 million US dollars.

Popular Bookstore's original 200,000 members in Singapore and more than 100 stores in Southeast Asia, and even publishing houses in Hong Kong and other industries were all taken into its pocket.

Pacific Online Bookstore also opened branches in mainland China, although the revenue share is not large.

However, the current Pacific Online Bookstore has become the largest e-commerce platform in Asia and the largest online and offline O2O model website in Asia.

After acquiring Popular Bookstore, the stock price of Pacific Online Bookstore has been rising all the way. By April this year, it broke through 70 US dollars. The market value of the 600 shares of Pacific Online Bookstore controlled by Li Xiaofan exceeded 400 million US dollars.

Similarly, Li Xiaofan pledged all these 600 shares of Pacific Online Bookstore to American banks such as Citi and Wells Fargo, and borrowed 300 million US dollars in cash.

Thus, by June, Li Xiaofan had pledged all the shares of listed and unlisted companies invested in the United States, and borrowed a total of $700 million in cash. Together with the $800 million he had earned from foreign exchange futures and stock index futures, the total amount of funds he controlled reached $1.5 billion.

Soros, who was called "a vicious beast lurking in the financial market" by the then Malaysian Prime Minister, was a Jew born in Hungary but achieved great success in the United States. His Quantum Fund, which was established in 1969 and 1994, increased in value 1,300 times through currency and stock speculation in the 26 years from its establishment in 1969 to 1994. The total value of funds controlled has reached more than $20 billion.

Compared with the current Soros, Li Xiaofan is much weaker.

Since last summer, Soros has been traveling around Southeast Asia. Wherever he goes, there will be disasters. Thailand, South Korea, Malaysia, and Indonesia have fallen into financial crises one after another, leading to economic crises and recessions.

When they finished traveling around Southeast Asia, the currencies of these countries, except for the Singapore dollar, were all badly hit.

Among them, the lonely and proud Hong Kong dollar seems to be a rabbit in the wilderness, and it is always a delicacy for Soros and other international speculators eagles hovering overhead.

Through careful planning, Soros and other speculators began a large-scale attack on the Hong Kong dollar at the end of July.

In his previous life, when Li Xiaofan was studying EMBA courses at Tsinghua School of Economics and Management, the professor reviewed the 1998 Hong Kong Island Financial Defense War for Li Xiaofan and others many times, and Li Xiaofan was too familiar with it.

In this life, Soros and others still use the same means:

They adopted a "two-pronged" approach. On the one hand, they took advantage of the weakness of the Japanese yen to spread rumors that the renminbi would depreciate, shaking investors' confidence in the Hong Kong dollar; on the other hand, they sold speculative Hong Kong dollar sell orders in the foreign exchange market, and at the same time sold in the stock market to lower the Hang Seng Index, and accumulated a large number of short positions in the Hang Seng Index futures market, hoping to make a big profit in the foreign exchange market, stock market and futures market.

From the end of July to the beginning of August, Soros and other international speculators once again used hedge funds to continuously attack the Hong Kong dollar in order to push up the interbank rate and interest rate.

Li Xiaofan knew that their attack on the Hong Kong dollar was only superficial, and the stock market and futures market were the real main targets. Making a feint to the east and attacking the west is a common means of speculation by international speculators such as Soros, and it has been successful many times.

In July, when the Hang Seng Index climbed to a high of 8,000 points, hedge funds sold the Hang Seng Index in large quantities and established a large number of Hang Seng Index short positions. In August, the Quantum Fund controlled by Soros had accumulated $4 billion in forward Hong Kong dollar selling orders, accounting for 60% of future forward contracts.

The reason why the hedge funds controlled by Soros established Hang Seng Index short positions is that they expect that the Hang Seng Index will inevitably fall sharply after the Hong Kong stock market is hit.

The price of the Hang Seng Index futures contract is 50 Hong Kong dollars per point, that is, if a short position is established, every point drop in the Hang Seng Index can bring a profit of 50 Hong Kong dollars to the short seller.

In the first 19 trading days before August 14, the Hang Seng Index fell by more than 2,000 points, and each contract could earn more than 100,000 Hong Kong dollars, which is shockingly high!

At this stage, Li Xiaofan also took advantage of the situation to be a "slippery" person, following Soros's Quantum Hedge Fund to short the Hang Seng Index and earn profits.

Soros and his gang of international speculators shorted stocks and futures in the Hong Kong stock market, which greatly suppressed the Hang Seng Index. At the same time, they also spread rumors such as the instability of mainland banks. Their purpose was still to create psychological conditions for their attack on the Hong Kong dollar. Their means were really unscrupulous.

In early August, they widely publicized that the RMB would depreciate by 10%. Among them, the RMB black market transactions in Shanghai, Guangzhou and other places once fell to 1 US dollar to 9.5 RMB. Speculators spread rumors that the RMB would depreciate in order to influence people's confidence in the Hong Kong dollar.

International speculators took the opportunity to spread rumors, claiming that "the Hong Kong dollar will soon decouple from the US dollar and depreciate by 40%", "the Hang Seng Index will fall to 4,000 points" and so on.

Their purpose is to disturb people's hearts and create a state of chaos.

On August 1, Army Day, Li Xiaofan led Financial Director Zhou Xiaoqing, Investment Director Wang Danrong, and a group of traders to fly directly from Singapore to Hong Kong Island and moved into the Bank of China Tower office building.

Earlier this year, Li Xiaofan rented the 28th and 29th floors of the Bank of China Building at 1 Garden Road, Central, Hong Kong Island, as temporary offices for the "Silicon Harbor" and "Loongson International" projects.

Half of the 28th floor was set aside as a trading office.

On August 5, Soros and other speculators sold more than 20 billion Hong Kong dollars in one day.

The Hong Kong Monetary Authority, contrary to its past passive approach, used Hong Kong's fiscal reserves to absorb the full amount, stabilizing the exchange market at 1 US dollar to 7.75 Hong Kong dollars, and the interbank market lending rate only rose slightly.

On August 6, speculators sold more than 20 billion Hong Kong dollars, and the Hong Kong Monetary Authority came up with a new trick: not only did it accept all the orders, but it also deposited the absorbed Hong Kong dollars into the Hong Kong banking system, thereby stabilizing the interbank lending rate and preventing the inevitable stock market decline due to the increase in the lending rate.

On August 7, due to the poor performance of some blue-chip stocks that had announced their interim results, the stock market fell sharply, causing the Hang Seng Index to fall 212 points throughout the day, a drop of 3%.

In the following trading days from the 7th to the 13th, the Hong Kong government continued to adopt the method of absorbing Hong Kong dollars to stabilize the interbank offered rate and thus achieve the goal of stabilizing the stock market.

However, due to the large-scale short selling in the stock market by speculators such as Soros, the Hang Seng Index eventually fell to a low of around 6,600 points.

During this period, Li Xiaofan did not short the Hong Kong dollar, but was shorting the Hong Kong stock index futures.

On August 13, after the Hang Seng Index was suppressed to 6,660 points, Li Xiaofan closed all the futures contracts. Ten thousand futures contracts, each earning more than 100,000 Hong Kong dollars, a total net profit of 1.1 billion Hong Kong dollars.

Subsequently, on the same day, he went long and began to open a large number of long orders to buy futures contracts.