“Look, starting in February this year, HSBC, Standard Chartered Bank in Hong Kong, JPMorgan Chase in the United States, and Osaka Securities in Japan have all significantly increased their holdings of forward futures contracts that are bearish on the Thai baht. I just calculated that it is already close to 5,000 contracts.”
"Then what?"
Upon hearing this number, Jesse's first reaction was that it was a rare and generous investment. She wondered if the shares had been held until now, since it was February, several months ago.
“No, what I’m saying is that they haven’t reduced these positions.” After saying that, Tom contradicted himself and said, “The strange thing is that these positions have not only not been reduced, but on the contrary, they have been increased quite a bit recently, and the total number of lots is almost 5,500.”
HSBC? Standard Chartered? Daban?
Jesse repeated the three names over and over, as if talking to himself, "These investment banks are all based in Asia, some in Hong Kong, some in Japan. They seem to have no connection whatsoever. Wait a minute! Could it be that funds from Hong Kong and Japan have already set their sights on the Thai baht?"
“Very likely!” Tom nodded and continued, “There’s not a single piece of news in the market about Asian capital shorting the Thai baht. If I hadn’t stumbled upon this today, I might still be completely unaware.”
"I think there are only two possibilities."
"One possibility is that this capital doesn't come from Asia at all, but from some funds we don't know about, using these major investment banks as a springboard for their expansion. But they're being far too vigilant. We're also Wall Street capital, and we haven't heard a single word about it, which is clearly abnormal."
"Another, and worst-case scenario, is that these funds are actually Asian capital, and they have been eyeing the Thai baht for a long time. Our attack on the baht this time has played right into their hands. When we lower our guard and think we have won a great victory, these funds will turn around and bite us."
......
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