Text: Bapro's monologue
Bapro's monologue
1997 was an extraordinary year. This year, Hong Kong, which had been in bondage for a hundred years, returned to the embrace of the motherland, but almost at the same time, in Hong Kong, which had just returned to the motherland, an invisible storm began to brew.
In 1997, the Western economy was in a severe recession, but the Southeast Asian countries were still in the illusion of a bubble economy, and they did not realize the hidden crisis behind their economic overheating.
And the greedy speculators have already heard the news......
The source of this article is from the official media [China Economic Weekly] published in 2018, [Communist Youth League Central Committee] published in 2019, and [Nanfang Daily] published in 2022. In order to improve the readability of the article, there may be polishing of the details, please read sensibly, for reference only!
Beginning of the Storm: Targeted!
Most Hong Kong people are unaware, but danger looms......
International investors seized the opportunity to take action and quickly moved between the financial markets of Southeast Asia.
They use scalpel-like short-selling, borrowing currencies from various countries and then selling them in large quantities, amplifying market panic through the media.
As a result, the exchange rates of various countries have plummeted, and huge profits have been made from it.
On July 2, 1997, the Thai baht was lost.
Thailand has announced that it has abandoned its fixed exchange rate system and is almost out of the control of the authorities. The Philippine peso, on the other hand, fell along with it.
In August, Malaysia abandoned the defense of the ringgit, and even the normally strong Singapore dollar did not escape the crisis.
In mid-November, a financial turmoil broke out in South Korea and the International Monetary Fund asked for help.
At the beginning of 1998, the financial turmoil swept again. Indonesia bore the brunt of the political and economic crisis.
The collapse of Southeast Asia's financial sector across the board has affected the Japanese economy, and the yen exchange rate has been falling.
One victory after another has made international speculators open their mouths and sniff the next prey in the Asian market, and the guns are aimed at Hong Kong!
Of course, here we have to mention the representative of this war - Soros.
Hedge fund giant Soros
Soros is a Jew who made his fortune by speculating and gambling.
He was once described by The Economist magazine as "the man who broke the Bank of England".
In this storm, as the spokesperson of international travel capital, he has a sense of existence that cannot be ignored.
Soros was behind the Southeast Asian financial crisis, and the financial community called the sweep "Hurricane Soros."
For a time, the name Soros was terrifying.
What is his method? This can be seen from the collapse of the Thai baht!
In the battle of the Thai baht, he first targeted Thailand, which was rapidly opening up its foreign market due to the blow to exports.
He decided that Thailand could not maintain the stability of the exchange rate, so he immediately borrowed a large amount of Thai baht, and then waited for the opportunity to sell his chips in one fell swoop, causing the exchange rate to plummet.
By the time the Thai government used its foreign exchange reserves to salvage the situation, they had already spread panic in the European media.
People are infected by fear, and they are shorting the trend, and their foreign exchange reserves have been depleted.
Going back to the battle to defend Hong Kong's finances, this time Soros still wants to repeat his old tricks.
After Southeast Asian countries were swept away by hurricanes, Soros turned his finger and set his eyes on Hong Kong, the financial center of the mainland.
When the wolves are around, can Hong Kong fight?
Since 1997, Hong Kong has been repeatedly attacked by international investors led by Soros.
Hong Kong's linked exchange rate system has many similarities with Thailand's fixed exchange rate system.
Storm Coming: Head to the Front!
The linked exchange rate system can be understood in terms of the voucher theory.
Use HKD as a voucher for US dollars, 7.8 HKD can be exchanged for 1 US dollar.
Against the backdrop of the collapse of the fixed exchange rate system in Southeast Asia, Hong Kong's linked exchange rate system is particularly prominent.
This also means that Soros and others may be able to concoct the same tricks in Hong Kong.
While selling a large number of Hong Kong dollars to exchange them for dollars, they bought a large number of futures contracts in the futures market, waiting for the union exchange rate to collapse.
But the Hong Kong authorities soon saw this, and they began to take action.
Whenever Soros borrowed Hong Kong dollars on a large scale, Yam Zhigang, then chief executive of the Hong Kong Monetary Authority, strictly controlled the exchange rate in order not to follow in the footsteps of the Thai baht.
He raised the Hong Kong interbank interest rate, which led to a significant increase in the interest cost of borrowing Hong Kong dollars.
Once the interest goes up, the cost of exchange will also increase greatly, depending on how they borrow!
But this move just fell into Soros's trap.
Joseph Yam, then Chief Executive of the Hong Kong Monetary Authority
In October 1997, international travel funds led by Soros hit. They sold heavily in the currency market, and the exchange rate of the Hong Kong dollar fell suddenly.
By the end of October, there was not much liquidity in the market. For a time, Hong Kong dollars were hard to find.
The Hang Seng Index is a "barometer" of the Hong Kong stock market, and the decline of the Hang Seng Index indicates that the Hong Kong stock market is also in danger.
It turns out that Soros is not a drunkard, and he doesn't mean to drink!
He laid out early, holding a number of Hang Seng Index futures contracts, feintting to attack the Hong Kong dollar and actually attacking Hong Kong stocks, putting Hong Kong in a dilemma.
Western public opinion says that Hong Kong has become an "ATM" for international speculators.
Soros used his usual trick again, fanning the flames in public opinion, making rumors of the imminent death of the Hong Kong market boiling, and selling a large number of Hong Kong dollars.
Later, in 1998, in the face of international investment and public opinion, Hong Kong was defeated one after another. In August, it is almost the time of the life and death of the Hong Kong dollar, what should I do?
As of August 1998, there were approximately 80,000 HSI futures contracts on international travel. According to the contract, the Hang Seng Index is directly linked to the buyer's profit or loss.
But Soros and others are still ready to move, and they have to make inch, ready to collapse the Hong Kong foreign exchange market and stock market together.
On August 5, the bombing and bombing came, and Soros's supernatural powers were fully displayed, which was the darkest moment for Hong Kong.
Can we only watch Hong Kong being looted by capital?
It's a matter of success or failure
August 28 is the delivery date of the Hang Seng Index.
When that day comes, if the situation has not improved, Soros and the others will be able to make a lot of money and leave in style.
Investors have no sleep at night, and Hong Kong's financial management institutions are also worried.
At the moment of survival, the turning point came with a decision -
The Hong Kong government decided that the government would intervene in the market.
At that time, Hong Kong was known as an international free financial center, attracting international capital in the name of a free market.
The implementation of this decision is more difficult than ever.
If the government overreacts and international capital is reluctant to invest in Hong Kong, it will also be a heavy blow to Hong Kong.
But after careful consideration, the government still chose to take control.
Of course, there is another reason why this decision was made -
The backer is coming!
The central government stands behind the Hong Kong government, and the confidence and confidence it brings are self-evident. In Ren Zhigang's words later: "It's good to go home!"
Comrade Zhu Rongji, who was the premier at the time, publicly promised that the renminbi would not depreciate, and said:
"The Central Government will do whatever it takes to safeguard Hong Kong's prosperity and stability and protect Hong Kong's linked exchange rate system once the HKSAR needs it. ”
The Hong Kong government itself has about US$98 billion in foreign exchange reserves, and with the support of the central government's public commitments, this tough battle has begun to see the light of day!
On August 14, 1988, the Hong Kong market, which had been losing steadily, suddenly fell into the sky in the smoke of gunpowder. The government entered the market to fight and fought vigorously with Soros and others.
The government began to buy the constituent stocks of the Hang Seng Index in an organized manner, which drove the index upward.
On this day, the previously arrogant international tour capital hit a wall, and the balance of victory tilted in favor of Hong Kong.
But Soros and others are eyeing each other, and they still don't plan to let go, and even want to fight against the water.
August 27, 1998, was the eve of an unquiet war. After the stock market opened, the offensive of international funds was ferocious, sweeping like a sea of mountains.
In the first 15 minutes, the turnover reached HK$1.9 billion. In the second 15 minutes, the turnover was HK$1 billion.
The Hong Kong government spent HK$20 billion on this day, and the Hang Seng Index was the highest since November 4, 1997.
However, the entire financial market is already on the verge of a storm, and the fate of the entire Hong Kong market hangs by a thread.
If the Hang Seng Index is to remain stable and remain high, we must fight for every inch of land.
In other words, as much as Soros and others smash, we have to accompany them all.
So can you win?
The Storm Ends: A Beautiful Fight!
On August 28, just five minutes after the opening of the Hong Kong stock market, the stock market turnover exceeded 3.9 billion Hong Kong dollars. Half an hour later, the turnover reached 10 billion Hong Kong dollars.
As of the close of the morning, the turnover has reached 40 billion Hong Kong dollars, and the trading volume after the afternoon opening is rising. But the Hong Kong government is not stopping, and it is a move.
At 4 o'clock in the afternoon, the closing bell rang, and the battle to defend Hong Kong's finances, which attracted the attention of the whole Hong Kong and even the whole of China, finally came to an end. Countless people crouched in front of the display screen and waited for a result......
And the Hang Seng Index, which was constantly beating on the big screen, finally fell at 7829 points, which made people almost want to cry.
This is significantly beyond the 7,500-point cost line of the HSI futures contract, which means that Soros's expectation of making a profit through the HSI contract has been shattered.
The Hong Kong market is kept!
On this day, the Hong Kong government mobilized almost all of its available foreign exchange reserves and ate all the international selling orders. The full-day turnover reached the highest record in the history of the Hong Kong stock market - 79 billion Hong Kong dollars.
The general trend has gone like a surging river, and Soros has been defeated like a mountain.
Looking at the increasingly stable Southeast Asian market and the sharply rising cost of foreign exchange, he could only flee with his tail between his legs.
The end of Hong Kong's financial defense war means that the all-purpose attack strategy of international capital will no longer work......
epilogue
In this war to defend the fortress, the Hong Kong market was preserved, and the solemn promise that the renminbi would not depreciate was fulfilled.
Soros's collapse in Hong Kong in the Southeast Asian financial market is a signal from the mainland to the world:
We're not fish to be slaughtered, and we're not easy to mess with!