International speculators roam between various stock markets year-round, possessing an intimate knowledge of the market's rules. To conceal their operations, they diversify their investments across different accounts, thus avoiding the need to report to the stock exchange.
In other words, the money from international speculators has entered a huge cash pool through third-party institutions, and the Hong Kong Monetary Authority and the Ministry of Finance have no ability to trace the flow of these funds.
However, based on the usual practices of international speculators attacking the stock market of a certain country or region, their methods can be summarized into two main parts.
The two strategies are shorting currencies and shorting stock indices.
If it is the former, international speculators will pay more attention to using exchange rate tools to conduct concentrated selling of Hong Kong dollar spot stocks in the Hong Kong stock market, while releasing negative news about the Hong Kong dollar to attract investors to sell in a rush.
They had already used this tactic when they attacked the Hong Kong stock market last time.
Shorting the Hong Kong dollar is relatively easy because adjustments to exchange rate instruments have a direct impact on the trading volume of currency futures.
If international speculators intend to short stock indices, they will focus more on heavyweight stocks and use tools such as futures to buy stocks at the bottom and short a particular stock index. Of course, such operations require a considerable amount of capital, which cannot be manipulated by a single fund.
The Hong Kong Monetary Authority was in such a state of turmoil because of disagreements on this issue, with the same agency splitting into two groups.
Some of the two groups believe that international speculators intend to short the Hong Kong dollar because their positions are low and their investment is small, allowing them to exit quickly with minimal risk.
Another group believes that international speculators are trying to short the stock index, based on the recent significant fluctuations in sectors such as agriculture, forestry, animal husbandry, power, and public utilities. These sectors have always been considered heavyweights in the stock market, so it would be strange if it wasn't the work of international speculators.
After Soros's last short-selling of the Hong Kong dollar, the entire Hong Kong Monetary Authority was on high alert for this situation.
After all, they aren't always so lucky, and every move they make doesn't hit the mark perfectly.
Most importantly, international speculators have returned, and they are well-prepared, so it will definitely not be as easy to deal with as it was last time.
Du Xingzhi of the Financial Supervisory Commission sat at his desk with a dark expression. He saw his two staff members standing in two rows, holding documents and confronting each other, exchanging heated words and neither giving an inch.
One side says Soros wants to short the Hong Kong dollar, while the other side says Soros clearly wants to short the Hong Kong index.
It's true that both sides have their own reasons.
Just as he was fretting, the phone rang. Du Xingzhi's secretary said on the phone, "Mr. Du, someone who claims to be the boss of Longteng Group wants to meet with you."
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