"This is completely different from shorting the Thai baht. Shorting the baht was intended to trigger an Asian financial crisis. Although everyone lost some money, the baht's price has recently fallen back. Based on GDP, they are expected to contract by about 20 percent this year. Our goal has been successful. This time, not only us, but Europe will also provide significant support," said a representative from the Federal Reserve.
"How much support? How much of our own money do we need to contribute? How many Hong Kong dollars are there around the world right now? After July, how determined will the mainland be to rescue the market?" Soros asked.
"Currently, China's foreign exchange reserves are US$140 billion. Based on their annual consumption, the minimum is US$50 billion. This year, with the rise in international commodity prices, their domestic factories have made significant imports. In addition, with the purchase of high-end manufactured products from abroad, the total is estimated to be between US$60 billion and US$80 billion!"
"The total amount of US dollars used to short the Thai baht was only tens of billions. This time, with the support of several European countries, the short-selling power could reach hundreds of billions of US dollars, which would not be a problem to crush the Hong Kong dollar! This is also the last blow against Asia. It has been dragging on for too long since 1996."
"We need to accomplish some strategic tasks, but we can't invest too much. China is not our main competitor yet. We've done what we needed to do and basically achieved what we wanted. So the next step is to talk. Before we talk, we need to get some leverage to prepare for the next mutual visits!"
The idea of shorting the Hong Kong dollar with hundreds of billions of dollars is a figure that would make even Wall Street firms, who are used to large sums of money, feel uneasy.
At the scene, several executives from Goldman Sachs and Morgan Stanley exchanged views and concluded that this was much more reliable than shorting the Thai baht, as a shorting operation of hundreds of billions of baht was something that most countries could not withstand.
"I think this is something that can be done. First of all, it is a fact that Hong Kong's industries are hollowing out. The Hong Kong dollar is pegged to the US dollar, and there is a lot of bubble in Hong Kong's financial industry. Both the mainland's foreign exchange reserves and Hong Kong's financial industry need to be shorted!"
Everyone was talking at once, discussing how much money they could make if the short selling was successful. Soros knew that Lu Feng had moved to Hong Kong. He was really bothered by Lu Feng. Everything was planned so perfectly. If Lu Feng hadn't suddenly appeared, the collapse of the Thai baht would have been a certainty.
Even though it has collapsed now, he still lost so much money. He has been explaining to investors all this time and finally managed to appease them. Now the opportunity for revenge has come.
With short-selling power in the hundreds of billions, plus the power of international speculative capital, let alone a small Lu Feng, even ten Lu Fengs would be no match for him.
“This time, Goldman Sachs will take the lead, with others cooperating. We will contribute 50 billion, and the major banks will be responsible for raising the Hong Kong dollars. The interest rate on the lease agreement shouldn't be too high, to avoid a prolonged dispute.” The Federal Reserve official looked at Soros and asked, “Will the Quantum Fund participate?”
“I’ll participate!” Soros replied.
As the meeting adjourned, everyone went back to prepare, some eager to increase leverage and make a big splash, while Soros hesitated.
"This is a golden opportunity for us!" Robertson said to Soros, "A short-selling force of hundreds of billions is beyond the reach of a nobody like Lu Feng, or even the Chinese government behind him. This isn't shorting currency, it's robbery!"
"I'm still thinking about those funds that suddenly appeared in Europe last time. When we traced them, we found that some of them came from Africa. Don't forget, China is a sovereign nation," Soros said worriedly.
“Remember this, there used to be two sovereign nations in this world, and now there’s only one left!” Robertson said confidently. “I don’t know how you managed to appease the investors, but Tiger Fund is under tremendous pressure. I have to bring the fund’s net asset value back up.”
"Let's wait and see. I will never use leverage; it's too crazy." Soros knows a little about China. He is a very cautious person, whether it's investing in currencies, futures, commodities, or anything else.
He believes that nothing in this world is 100% certain. When someone tells you that something is 100% guaranteed to make money, you should be careful, as there may be hidden risks that you cannot see.
Soros watched Robertson walk away. He knew that the man had lost his temper and was eager to bring the fund's net asset value back up to give investors an explanation. The most important thing for an investor is a clear mind. Once you lose your temper in the financial market, you become a beast waiting to be slaughtered.
Soros returned to the company and, after much deliberation, decided to consult someone familiar with China. He happened to know an old friend who was an absolute China expert.
He made the call, and his assistant helped him schedule an appointment. A few hours later, the two parties agreed to speak on the phone, and Soros recounted the whole story.
"You want to ask me what the chances of this succeeding are?" the voice on the other end of the phone said.
“Lu Feng wasn’t the only one behind the Thai baht incident; I believe China was also involved. Now that we’re officially facing them, I personally feel a bit uncertain,” Soros said frankly.
"I think the chances of this succeeding are no more than 10%. Even if the short selling is successful, the benefits will definitely not be yours. They will seek other benefits in exchange. As far as I know, it will definitely be international support. The people on both sides are communicating very frequently. China wants to join the WTO, and this matter has been under negotiation."
"What they want is a strategic balance. They are simply afraid that this country will lean towards Russia. Our vice president has also said that leaning towards Russia would be an extremely wrong decision. However, they are also exerting pressure in the Asian seas. These conditions are unacceptable to China."
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