Xing Baohua felt a little depressed thinking that Japan's economic bubble would take several more years to burst, but now was the best time to buy in at the bottom.
Last year, the G5 countries intervened in the Japanese exchange rate in China, forcibly appreciating the Japanese yen from around 1:240 to around 1:120 within a year.
By the mid-1990s, the ratio had reached 1:70.
This astonishing increase is commonly referred to as: the appreciation and depression of the RMB.
The appreciation of the Japanese yen is good for importing countries, but it has dealt a severe blow to Japan's domestic manufacturing industry.
This is a chain reaction.
The Japanese made their fortunes through exporting goods, causing their GDP to surpass that of the United States. This brought them a large amount of foreign exchange, which they couldn't keep idle. They engaged in various forms of speculation domestically, including in the stock market, land, and real estate, driving up prices.
More often, they buy overseas assets, especially in the United States, claiming that buying JD.com would buy the entire United States.
This arrogant attitude is outrageous. Enraged, the United States, in conjunction with the G5 countries, pressured Japan to appreciate its currency.
To prevent the Japanese central bank from intervening in the foreign exchange market, they imposed many humiliating conditions. At that time, the Japanese central bank's dollar balance was comparable to that of the US central bank.
The Japanese just watched their money rise steadily. Logically, their central bank should have quickly adjusted its interest rates. And indeed it did, but it did the opposite. The continuous interest rate cuts have caused immense hardship for many manufacturing companies.
The first chain reaction is increased unemployment. It's not very obvious at first, but it accumulates gradually and leads to increased unemployment.
That's not all. With higher production costs, businesses have less working capital. What can they do but take out bank loans?
This led to a significant factor in the subsequent economic crisis.
Many export companies previously had large amounts of foreign exchange, but after the appreciation of the currency, the value of their US dollars decreased.
Previously, it cost 240 to exchange for 1 US dollar. After a year, it became 120 to 1 US dollar.
Prices remained the same, labor costs were unchanged, but after selling the goods, the money was halved.
These are some of the things we often encounter in life.
Prices and property values have gone up, but wages haven't. With a monthly salary of 3,000 yuan, I used to be able to eat very well on a 5-yuan bowl of ramen and a 3-yuan jianbing (Chinese crepe).
When I woke up, the ramen was 8 yuan and the jianbing (Chinese crepe) was 5 yuan.
Not only did my salary not increase, but the rent for the apartment immediately went up by 100 yuan.
I want to quit my job but I don't dare. I've found that most jobs are the same; there aren't any companies that pay higher wages. On the contrary, migrant workers' wages have increased.
Many of Japan's export companies have a lot of foreign exchange reserves, even though they've shrunk in value. What can they do? Overseas investment is clearly unrealistic, and costs would double.
So let's turn our attention to the stock market and real estate.
With the central bank lowering interest rates, who's going to save money? Most of it will turn into real estate, which appreciates in value.
Everyone is speculating in real estate, buying land, and building houses. They don't have enough money, so they take out loans and mortgage everything.
Banks also like to stimulate the economy, lending in various ways, as long as there is collateral. They use every possible means to stimulate real estate consumption.
Down payment installments and other similar expenses are all passed on to the banks.
Japan has a small land area but a large population, and its residents all like to flock to big cities, leading to a surge in real estate sales.
The fluctuations in foreign exchange rates and the enormous, intangible losses in wealth were all passed on to ordinary Japanese soldiers.
There are many consequences. Japan, with its consistently high suicide rate, is a result of this economic pressure.
There's also that fast-paced work style. In order to improve work efficiency, many inhumane systems have been implemented.
Xing Baohua instructed the investment and market analysis departments to search for information on the Japanese real estate and stock markets.
To be honest, the hundreds of millions of dollars this guy has wouldn't buy many buildings over there.
In Japan, for example, the currency is settled in Japanese yen. If Xing Baohua had to exchange it for Japanese yen, he would have been at a disadvantage.
Then the only option is to use short-selling techniques with financial institutions.
For example, the exchange rate is currently 1:120 against the US dollar. In a few years, the yen will continue to appreciate to 1:100. There is a 20% difference in this exchange rate. Don't underestimate a 20% difference; on a $100 million investment, there will be a $20 million difference, which is a 20% profit.
How do we achieve this 20% price difference? Let's explain the principles of short selling.
Short selling requires a substance as a concept for borrowing and repaying.
Xing Baohua understands the principles, but he only knows short-selling techniques in futures and foreign exchange. Real estate trading, a tangible asset, should be left to professionals.
He only needs to prepare the funds, regardless of the size of the operation or the amount of money required.
Are the experts and traders in their own financial department idle?
Despite spending their days drinking tea, reading newspapers, and analyzing data at the company, they are currently the most idle group of people in the entire company.
Xing Baohua called him over to analyze the Japanese's real estate data.
The boss wanted to short-sell Japanese real estate, which shocked them. No normal person would do that.
Housing prices are soaring, and there are no signs of a collapse yet. With that kind of money, investing in the Japanese stock market would be fine, as it's also constantly growing.
Xing Baohua dared not touch the Japanese investment scheme; it was too ruthless. He'd stick to real estate.
Who knows, he might become a landlord by speculating on real estate.
After analysis by the company's finance department, it was determined that only US dollars could be used as collateral to obtain a loan from a bank or an institution with real estate.
The technique involved here falls under foreign exchange trading. If Xing Baohua believed the RMB would continue to appreciate in value, he could profit from the exchange rate difference.
It's called real estate speculation, but it's actually a foreign exchange operation.
To buy property with a bank loan at the current 1:120 exchange rate, Xing Baohua would use several hundred million US dollars as collateral. He would then repay the loan within the stipulated time.
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