The next day, Chen Ze arrived at Chaos Tiancheng Futures Company fifteen minutes early.
"Mr. Chen, the spot prices in Xinjiang have also fallen." Ge Weidong walked over quickly and handed over a newly printed set of data, indicating that the cotton ginning factory had begun a panic sell-off of its inventory.
Chen Ze took the document and quickly scanned the numbers.
His pupils suddenly contracted—the decline in the spot market far exceeded the normal transmission rate that should exist in the futures market.
"Mr. Ge, check all short positions with more than 500 lots yesterday and today." Chen Ze's voice was soft, but Ge Weidong knew what it meant.
Without saying much, Ge Weidong immediately arranged for the information team to investigate.
Five minutes later, in Zeyuan Capital's conference room, a projector displayed a complex relationship diagram on the screen. Dozens of offshore accounts, through layers of equity structure, ultimately pointed to the same controlling party—Louis Dafoe Commodity Trading Company.
“Claude Louis Dafoe…” Chen Ze murmured the name, and the temperature in the conference room seemed to drop several degrees.
This giant, one of the four largest grain traders in the United States, has carried out numerous harvesting operations in the cotton markets of India and Pakistan.
Risk control director Wang Lei pushed up his glasses: "According to model calculations, they have already established short positions equivalent to 15% of the annual domestic cotton production, and they are still increasing them."
Chen Ze stood up and walked to the window. Cargo ships shuttled back and forth on the Huangpu River, and the Bund's international architecture in the distance shimmered in the setting sun.
“They want to create a financial crisis like Thailand’s in 1997.” Chen Ze turned around, his eyes sharp. “First, they will short futures to drive down prices, causing panic in the spot market, and then they will buy up physical assets at low prices. If they succeed, my country’s cotton industry will face annihilation.”
Ge Weidong nodded in agreement.
"Mr. Ge, Louis Dafoe's move to short Chinese cotton is premeditated, and this battle will likely last for quite some time," Chen Ze said bluntly.
"As long as we can protect our cotton market, what does it matter if we fight them for a year or two?" Ge Weidong said, a determined look in his eyes.
Next, Chen Ze and Ge Weidong teamed up to fight Louis Dafu in cotton futures for three days.
On July 9th, the cotton futures market experienced a dramatic turn of events.
Under the short-selling pressure led by Louis Dafoes, the price of the main contract broke through the key support level of yuan/ton. In an instant, stop-loss orders flooded in like a burst dam, and the price plummeted to yuan.
"Now!" Chen Ze ordered in the trading room of Zeyuan Capital.
Within thirty seconds, more than 200,000 long orders entered the market simultaneously, and the price rebounded like a rocket to yuan. Exclamations arose in the trading hall, and the short sellers were caught off guard.
At Louis D. Fauci's China headquarters, Jess stared at the real-time market data, his azure eyes narrowed into slits. This forty-nine-year-old financier from the United States had an aristocratic pale face and impeccably blond hair.
"Find out where these funds came from?" he asked in American English.
The analyst nervously typed on his keyboard: "Some of it comes from Ge Weidong's Chaos Investment, and the other part..." He swallowed hard, "is scattered across the proprietary accounts of seventy domestic futures companies, but the order placement times are precisely synchronized."
Jess smirked coldly. "Interesting. Tell Richard to contact the media outlets we work with so they can publish that report about the wave of bankruptcies in China's textile industry."
That afternoon, an article titled "China's textile industry debt crisis may trigger a cotton price collapse" went viral in global financial media.
Despite its numerous flaws, the Wall Street Journal's name alone was enough to send panic through the market, causing cotton prices to plummet by 2%, erasing all of the morning's gains.
Chen Ze and Ge Weidong stared intently at the curve on the screen.
"This is a combination of tactics!" Ge Weidong said, biting his cigar. "Media hype combined with financial suppression. Our little bit of money won't last more than a few days."
Chen Ze pulled up a set of data: "The spot market has started to follow suit and fall. The quotations of some cotton ginning mills in Xinjiang have fallen below the national reserve price."
"We must break the vicious cycle between the futures and spot markets." Ge Weidong suddenly slammed his fist on the table. "I contacted several textile groups, and they are willing to form a purchasing alliance, but they need policy backing."
"I'll make some calls to try and get the authorities to cooperate with us. Also, we need to create a false impression..." Chen Ze said after thinking for a moment.
After he finished speaking, he went to the balcony and called his father-in-law.
After the call connected, he said, "Hey Dad, I'm currently dealing with foreign capital in cotton futures, and I'm in a bit of trouble. I need your help."
On the other end of the phone, Wang Jianhua solemnly warned, "Xiao Ze, you must be extra careful when dealing with these foreign giants. Tell me, how can I help you?"
Upon hearing that his father-in-law was willing to help, Chen Ze explained his plan to him.
After listening to Chen Ze's plan, the person on the other end of the phone remained silent for a while before slowly saying, "Tomorrow, pay close attention to official news. I have something to do, so I'm hanging up."
Chen Ze was about to say thank you when he heard a busy tone on the phone.
The following day, rumors spread throughout the market that the Chinese government was considering increasing cotton import quotas to stabilize prices. Short sellers reacted quickly and intensified their selling pressure.
Meanwhile, Chen Ze and Ge Weidong quietly shifted their funds to far-month contracts, adopting a stance of abandoning near-month defense.
Unexpectedly, Louis Dafoe's Jess fell into the trap, shifting most of his firepower to the near-month contract, attempting to break through the key support level in one fell swoop.
Just as prices were about to fall below yuan, the National Development and Reform Commission suddenly issued an announcement: in order to stabilize the market, no new cotton import quotas will be issued this year, and a temporary reserve plan of 500,000 tons will be launched.
The market reversed instantly! Short sellers rushed to close their positions, and prices soared by 3%. Jess smashed a crystal wine glass in his London office.
"Investigate! Who leaked the information!" he roared, then calmed down, "No, this isn't a leak...it's a trap."
He pulled up the fund flow chart for the past three days and suddenly discovered a startling fact: Chen Ze and Ge Weidong had already started building long positions in the far-month contracts two days earlier, while the defense in the near-month contracts was just a bluff.
"Notify the trading department to immediately close 20% of the short positions," Jess ordered. "At the same time, prepare a second plan."
At 3 PM, the stock market closed, and Chen Ze and his team finally managed to control the price at [price per ton], a slight decrease compared to yesterday.
That evening, Ge Weidong received a mysterious phone call. The caller ID displayed gibberish, and the voice on the other end was altered:
"Mr. Ge, the game has only just begun. Do you know how I caused the Thai baht to collapse in 1997? The same script will be played out again."
Ge Weidong said coldly, "China is not Thailand; you will pay the price."
After hanging up the phone, Ge Weidong immediately contacted Chen Ze: "That Jess won't give up. He mentioned Thailand in 1997, which means there will be cross-market coordinated attacks next."
"Mr. Ge, we'll deal with water by damming it, and if a poisonous snake comes, we'll give it a good whack," Chen Ze said calmly.
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