Chapter 453 Only a fool would target the Hong Kong dollar: Another Three Bays Reorganization
In September, spring returns to South Africa, temperatures rise, and rainfall gradually increases, making it the perfect time to plant summer crops.
Corn, sorghum, cotton, soybeans, sunflowers, and other crops have all entered the planting season.
In addition, rice must be planted in the fields, and the timing of the planting must be opportune.
When the planting season ended, the farmers she had hired from China boarded a plane to China along with the white English teacher she had recruited.
Tsk, I never expected that it was just a casual thing to do back then. The company was recruiting white job seekers who were rejected, and she, based on the principle of not wasting resources, casually sent the one with a college degree back to Jiangdong to work as an English teacher.
Unexpectedly, her brokerage business grew exponentially, becoming her most profitable venture in South Africa. Both supply and demand sides responded enthusiastically.
It's clear that making money with people is always faster than making money with goods.
Wang Xiao estimated that the demand for foreign teachers would be even greater once China joined the WTO.
This business can't be abandoned; making money is one thing, but building connections is another. With people on your side, you can always unexpectedly discover surprises.
The computer beeps, indicating a new email has arrived.
Wang Xiao opened the weekly financial news report that Zhou Liang had sent her, and her lips twitched involuntarily.
The first headline reads: On September 20, Malaysian Prime Minister Mahathir Mohamad openly criticized currency transactions in a public speech, emphasizing that currency purchases are only necessary for financing physical trade.
Okay, this message isn't funny.
Given that Malaysia was also severely impacted by the summer's financial crisis and shows no signs of recovery, it can certainly be described as a state of grief and indignation.
What's intriguing is that on September 21, Soros responded, stating that Prime Minister Mahathir's idea was a pipe dream and that the suggestion to cancel currency transactions was not worth considering at all.
Well, actually it's not funny either.
However, considering that on July 26th of this year, the day after Gusinski and Potanin fell out over the telecommunications investment company, Prime Minister Mahathir publicly accused Soros of being the culprit behind the attack on Southeast Asian currencies. After being denied, he then called Soros a "fool".
Isn't this getting interesting?
Well, given Prime Minister Mahathir's status and the nature of Asians, those words were quite harsh.
Now the two sides are arguing again, and I don't know how long this will last.
But what's the point of arguing now?
Prime Minister Mahathir did express his true feelings and vent his frustrations. But at the same time, he also made Malaysia's economy more precarious.
Because no matter who sees this news, their first reaction is that Malaysia is out of resources, which is why the Prime Minister said he wanted to overturn the table: We're done playing.
If you heard this, what would your reaction be? Would you join the Premier in righteous indignation? Most likely not.
The first choice for ordinary people is likely to be to run away as quickly as possible. They will likely sell off more ringgit to ensure the maximum protection of their assets.
Look, this is the world of international finance.
When a crisis strikes, confidence is more important than gold, and the key to maintaining confidence often lies not in telling the truth, but in telling a new story that can stabilize the situation and endorsing it with resolute actions.
Xiao Gao and Xiao Zhao eagerly read the emails, absorbing financial knowledge.
It's not that they have any new ideas, but they're both just following the boss around and not learning anything. Wouldn't that be a waste of time?
Now they are quite interested in Asia's strategies for dealing with the financial crisis.
Representatives from Japan's Ministry of Finance proposed the establishment of an Asian Monetary Fund at the joint annual meeting of the International Monetary Fund and the World Bank, hosted in Hong Kong.
The fund envisions a $100 billion fund with members from 10 Asian countries or regions: Australia (oddly enough, Australia is considered an Asian country), China, Hong Kong, Indonesia, Japan, Malaysia, the Philippines, and Singapore.
Singapore, South Korea, and Thailand.
The two nodded as they looked at it; it was indeed a good idea.
Since the outbreak of the Thai financial crisis, the two of them have been looking at financial data every day. Their biggest feeling is that Asian countries are being beaten down by international short sellers, which is actually quite unfair.
Why do I say that? Because Asian countries have substantial foreign exchange reserves.
By the end of 1996, five of the world's six largest holders of foreign exchange were in Asia.
Japan, China, Hong Kong, Taiwan, and Singapore together have approximately $600 billion in reserves.
With such a substantial fortune, if they put all their efforts into one direction, even if all the speculative capital on Wall Street came in, they wouldn't be a match for them.
Xiao Gao asked curiously, "Boss, if that's really the case, does that mean we won't be able to short Asian markets anymore?"
Wang Xiao had already checked the South Korean stock market trend. News reports indicated that the Korea Composite Stock Price Index (KOSPI) was falling continuously, hitting a new low in the past six months, due to the impact of Kia Group's bankruptcy filing.
Upon hearing the bodyguard's words, Wang Xiao succinctly replied, "This fund won't work."
Huh? The bodyguard couldn't understand.
Isn't this a good thing? They saw that Asian countries were responding to the crisis quite positively, all with the intention of solving the problem. How could it not work?
Wang Xiao didn't turn around, replying with three words: "Think for yourself."
The two were completely baffled and both looked at Lyuba at the same time.
The latter rolled his eyes at them speechlessly and retorted, "You two should know the answer better than I do."
As she spoke, she pointed out the five major countries and regions holding foreign exchange reserves on the map, and then pointed out the locations of ten other members.
Although Xiao Gao and Xiao Zhao weren't the sharpest brains, their observation skills were top-notch. They immediately spotted a bug: a region with high foreign exchange reserves was not on the Asia Fund's membership list.
Who could it be? Who else could it be but Taiwan!
Taiwan is part of China. Unless the Japanese Ministry of Finance has lost its mind, it is absolutely impossible for them to bring Taiwan into the foundation.
Wang Xiao kept his eyes glued to the computer screen and asked slowly, "If Taiwan is willing to contribute money, will the Asia Fund accept it or not?"
Money is so tempting; who can truly resist it, especially when everyone is short of cash? If Taiwan, as one of the "Four Asian Tigers," takes a proactive stance, the Asia Fund could easily be put on the table.
How can we continue like this?
Hey! It's true that economics and politics are inseparable; you can plant landmines without even realizing it.
Wang Xiao was still staring at the information about South Korea when she casually asked, "Anything else?"
The two bodyguards immediately tensed up, looked at each other, and then simultaneously looked at Lyuba.
This time, their colleagues simply rolled their eyes and showed no intention of offering any help.
Who says Chinese people are the most politically sensitive? She has to refute this rumor today, because there will always be people who lower the average score.
Wang Xiao was exasperated: "Think about it, with ten members, who listens to whom? Just look at the CIS countries now. They used to be one family, but now there's one who's dissatisfied and two who're resentful."
"When it comes to money, all similar organizations, whether it's the Warsaw Pact or NATO, need a leader who can keep things in check. When disagreements arise, this leader must step forward and decide the direction of the matter."
"Who will be in charge of this Asian fund?"
Xiao Gao and Xiao Zhao were speechless.
They went through all ten members and realized that none of them could control the others.
From a theoretical perspective, Japan's economy is the best, and it seems very suitable to be the leader in this field.
But think about it again, making the remaining nine serve as Japan's lackeys? That's just outrageous!
Don't forget that Japan invaded the whole of Asia during World War II, and countless people have a blood feud with it.
First of all, there's the matter of national sentiment, which is absolutely unacceptable to everyone, let alone anything else.
“If you two have some free time,” Wang Xiao finished reading the email, closed the page, and finally turned to look at the bodyguard seriously, “why don’t you analyze why Japan would step forward and propose the establishment of this Asian Foundation?”
Now the two of them really started to rack their brains.
People have only two motivations for doing things: seeking fame or seeking profit.
From a profit perspective, Southeast Asia is an important destination for Japanese overseas investment. Japan has substantial direct investments and bank loans in various Southeast Asian countries.
What will happen to these investments and loans if the Southeast Asian economy collapses? Aside from those who truly love you, the people who most want you to survive are always your creditors.
Otherwise, what will happen to your loan if you die? What will happen to the money I've invested in you? I'm still hoping to get the money back from you.
Therefore, Japan must step forward and find a way to quickly stabilize the Southeast Asian economy. Saving others is saving oneself; this is Japan's purse, and it must do everything in its power to protect it.
Wang Xiao listened to their analysis, nodding as she spoke, and then came the question that all her subordinates were terrified of: "And then?"
The two bodyguards were stuck, practically scratching their heads in frustration.
Wang Xiao gestured to her assistant, who was organizing documents and chuckling to herself, and asked, "Tell me, what else?"
The assistant, caught off guard, quickly replied, "Also, we need to control the source of infection. Japan doesn't want the crisis to escalate further. Otherwise, if this continues, the Asian miracle will be completely destroyed. The core of the financial crisis is a crisis of confidence and a liquidity crisis. Japan will also be affected."
Wang Xiao nodded, and like all bosses wielding whips, continued to exploit: "Have you ever thought about why Japan felt the crisis would escalate further? At the beginning, everyone thought the problem wasn't serious."
The assistant was able to provide an answer to this: "Because the IMF's bailout plan for Thailand was useless. It didn't even require banks to suspend operations. As soon as the IMF's money arrived, those eager to escape the market would try every means to get the money and run. This money could only end up in the pockets of those who had the means to obtain foreign exchange the fastest."
As for who has the opportunity to obtain foreign exchange the fastest? Of course, it's those with connections.
Of all the resources that are fought over, the first to enjoy them are invariably those with privileges. This is especially true in Southeast Asia, where crony capitalism is prevalent.
After the privileged class plundered all this money, what was left for Thailand and its ordinary people was still devastation.
The International Monetary Fund's package of loans provided $17 billion, while Thailand's debt was $29 billion.
It's completely unmanageable.
Unfortunately, the International Monetary Fund remains blindly optimistic.
On August 20, it was announced that bailout funds would be paid to Thailand in accordance with a package plan.
On August 21, IMF Managing Director Michel Condessour confidently stated: "The worst of this crisis is over."
And then what? Then for the rest of August, and even the whole of September, the whole of Southeast Asia is in the same boat, all in the same boat, you can't escape, and I can't escape either.
Wang Xiao looked at his assistant seriously: "After reading about the International Monetary Fund's bailout plan, what do you find unbelievable, or even infuriating?"
The assistant was momentarily stunned, and hesitated before answering, "The West didn't pay."
In response to Thailand's $17 billion bailout plan, the International Monetary Fund contributed $4 billion, while Australia, China, Hong Kong, Malaysia, and Singapore each pledged to contribute $1 billion to the pooled reserves. Japan made the largest contribution, offering $4 billion, while Indonesia and South Korea each pledged $500 million.
Meanwhile, the United States and Europe remained completely indifferent and did not contribute a single penny.
This is not their tradition.
In 1995, when Mexico experienced a financial crisis, the International Monetary Fund provided a total of $50 billion in aid. The United States also pledged an additional $20 billion in financial assistance.
Comparing the two, it feels like bullying, it's going too far.
This isn't about having less flesh on the back of the hand and more flesh on the palm; it's about completely disregarding Asia.
Wang Xiaodun gently persuaded, "The money is in their pocket. Whether they take it out or not is their freedom. Why are you angry?"
The assistant blurted out, "Because Europe and America have also benefited greatly from Asia's economic miracle!"
For a pair of jeans worth $20, the hardest, most tiring, and most time-consuming work was all done by Asians. How much did they earn? Less than $1.
The remaining $19 was taken by Europe and the United States.
Wang Xiao nodded: "Anything else? Anything closely related to this rescue plan?"
While the assistant was still racking his brains, Xiao Zhao, unusually quick-witted, said, "They don't pay, yet they interfere and make things difficult for the rescue plan."
He pointed to the documents that had just been faxed over, "The G7 ministerial meeting decided that the Bank of Japan would suspend lending to Thailand, but European and American banks haven't done anything. This isn't a question of freedom or lack thereof. Why did their banks stop lending during the Latin American crisis two years ago? It's clearly a double standard. In Asia, they want to take advantage of everything but don't want to shoulder any responsibility."
The assistant nodded repeatedly, agreeing with Xiao Zhao's idea: "Brother Zhao is right."
Wang Xiao laughed: "Add this point, and your anger will only make the victims who have suffered economic losses even angrier."
The assistant quickly agreed, then reminded his boss, "It's almost time, boss, we need to head to the banquet."
What kind of banquet? It was a banquet to entertain the Chinese delegation.
China aims to establish diplomatic relations with South Africa, and this work should be completed by the end of this year.
The general direction has been set, but the details still need to be put into practice, which requires a lot of back-and-forth negotiations.
When their "family" members arrive, the overseas Chinese and Chinese community representatives in South Africa will certainly react positively, expressing their welcome to their "family" members and emphasizing that they have someone backing them up.
To be honest, Wang Xiao doesn't particularly enjoy attending these kinds of events. They take up too much time, and you inevitably have to drink, which is annoying.
But she still has to attend the events in South Africa.
Because mainland businessmen have only been developing in South Africa for a few years, Taiwan's influence here is still quite significant. As a representative of major businessmen, if she doesn't step forward to support the Chinese delegation to South Africa, she's essentially slapping her own people in the face.
Therefore, despite the annoyance of social engagements, Wang Xiao obediently went to change her clothes.
While getting her hair done, she even quickly applied a face mask.
Does it work? I don't know, but the main thing is to have the right attitude.
When he arrived at the hotel where the delegation was being entertained, all the infighting, power struggles, and bloodshed had nothing to do with Wang Xiao.
No matter who greets her, she can always steer the conversation to her rice paddies and farm within a couple of sentences.
Oh my, you don't know how delightful those boundless fields of crops are; those galloping ostriches, each one so lively, are a joy to behold.
This left several men who had approached her with wine glasses, trying to get close to her, speechless.
Can you please stop being so fake? You claim to be passionate about farming.
If you love farming so much, why can't you farm in China? There are so many farmers in China!
When a person reaches a certain status, they no longer need to be observant all the time.
Even if others don't want to listen, it doesn't stop Wang Xiao from wanting to talk.
People around him moved about, but it didn't stop Wang Xiao from spouting agricultural knowledge.
Only when the other person couldn't take it anymore and quietly left during the band's performance did Wang Xiao pick up a glass of locally produced beer and drink it with lingering relish to soothe his throat.
A soft laugh rang out from the side, and Director Yuan from the delegation came over with a beaming smile to clink glasses with her, flattering her earnestly: "President Wang is truly an agricultural expert."
In China's official system, the director, like the secretary, is a position that can be promoted or demoted.
For example, this Director Yuan is the third-in-command of the delegation, in charge of economic work.
His coming over to greet the business representative was perfectly normal in other people's eyes.
Wang Xiao didn't feel embarrassed at all by being flattered. His face was full of pride as he grinned and said, "I've actually gained some experience. Director, if you have any friends who are interested in farming in South Africa, you can contact me. I promise to tell you everything I know."
Director Yuan, intrigued, pressed on: "How is the land in South Africa accounted for? How did they agree to let you plant it? Where did the seeds come from?"
Wang Xiao said with a hint of pride, “I have friends in the government. I told my friend that South Africa’s foreign exchange reserves are so precious, how can we easily use them to import rice? We should grow what we can grow ourselves. The valuable foreign exchange should be used to import more advanced equipment to improve productivity. My friend agreed with this idea, helped me with the application, and it was approved.”
Perhaps because she was talking about something she was proud of, she became very animated. "Director, let me tell you, farming in South Africa is completely different from farming in China. They have to grow rice in dry conditions, and I imported drought-resistant varieties from China. People here used to try growing it in paddy fields, but they all failed. It was only after agricultural experts from China came to investigate that they advised me to plant it in low-lying areas, in an anaerobic environment. Planting can begin as early as September; you just need to irrigate quickly to raise the temperature. After that, the paddy fields need to be kept moist, not dry..."
She talked on and on, eager to share her extensive rice-growing experience, as if she were some seasoned farmer with rich practical experience.
In fact, she was just an observer and has never planted a single rice seedling in the field to this day.
But it doesn't affect her performance.
Director Yuan, being good-natured, actually joined in the conversation with her.
When he was sent to the countryside, he also farmed for two years, so he had more practical experience than Wang Xiao.
People walked past them, and all who heard it were utterly speechless.
Especially when the two of them finally found a table, sat down, and started discussing things enthusiastically, some people couldn't help but roll their eyes—what's going on? Discussing farming in this kind of setting!
Director Yuan clinked his glass against Wang Xiao's, smiling, and suddenly changed the subject: "Mr. Wang, I have a personal request."
Wang Xiao readily agreed: "Your friend needs rice seeds? He can come directly to me later. As long as you mention your name, there will be absolutely no problem."
Director Yuan's smile remained unchanged, but his voice lowered: "My request is that you do not short the Hong Kong dollar."
A clap of thunder sounded outside the window, followed by the pattering of rain; the spring rains had arrived.
If this were a movie or TV show, this scene would be an exclamation mark, an exclamation mark that shakes the protagonist's heart.
But Wang Xiao remained completely unmoved.
She was not surprised at all that relevant domestic departments had noticed her short-selling activities.
In fact, although many domestic government agencies are busy making money through tertiary industries, and Beijing State Security Bureau is in a mess and in a sorry state in the Deng Bin illegal fundraising case, the basic foundation of the relevant departments is still there.
Wang Xiao guessed that she had been under scrutiny by relevant domestic departments ever since she interfered in the Russian election.
But even if they're being watched, they won't do anything.
What could be done? Such a sensitive matter, at that time, any intentional contact from domestic officials could be regarded as interference in the internal affairs of another country.
The relevant departments are just watching without intervening; that's the individual behavior of citizens overseas. As long as they don't violate the law, they can do whatever they want—it's entirely their freedom.
As for expecting anything from her? There's no need.
We are not at war now, much less in the Cold War era, and the two sides can fully engage in exchanges through normal political and economic activities.
Unless someone's brain is slammed in a door or kicked by a donkey, the relevant departments would never approach her or recruit her as an intelligence agent.
To be honest, Wang Xiao's prediction was quite accurate; that's exactly the attitude of the relevant departments.
In fact, if the Southeast Asian financial crisis hadn't escalated, Director Yuan wouldn't have made the appearance and said those words.
He knew Wang Xiao, and had become interested in her much earlier, after the 317 Treasury Bond incident, when she came into his view.
As one of the few investors who made a fortune in this turmoil, her life trajectory deserves attention and study from financial professionals, especially her future development.
But to Director Yuan's surprise, her investment in 327 treasury bonds seemed to be just a joke. After making money, she donated it all without saying a word.
In the following period, she ceased her activities, as if she had casually abandoned the financial game. Even the Mexican financial crisis that shocked the world showed no trace of her involvement.
Two years later, when her identity became a sensitive issue, she flew from South Africa to Bangkok, and didn't leave until the Thai financial crisis fully erupted.
The international financial system is now very complex, with offshore investment everywhere, and the original regulatory methods are outdated.
At least Director Yuan and his colleagues had no idea how much money Wang Xiao had invested in Southeast Asia, or how he had specifically operated it.
But a person's actions can always reveal a lot. He had good reason to believe that she was a major short seller, a major short seller involved in shorting the Southeast Asian market.
This made Director Yuan and his colleagues wary, especially after she mediated the conflict between Russian oligarchs Gusinsky and Potanin; this wariness reached its peak.
Firstly, she acquired $2 billion in a very short period of time. This money, combined with her existing funds, would be a massive bomb if used to short the Hong Kong dollar, and no one could underestimate it.
Secondly, her successful mediation of the oligarchic conflict, and decisively and without any hesitation, combined with her previous clashes with the oligarchs, demonstrates her significant influence over them. If she were to rally these oligarchs, who amassed fortunes during Russia's privatization process, to join her in shorting the market, the Hong Kong dollar would undoubtedly suffer even greater losses.
Realizing the risks involved, Director Yuan had no choice but to step in.
Whether he pleads or pesters him relentlessly, he has to stop Wang Xiao, otherwise things could easily spiral out of control.
Wang Xiao looked Director Yuan up and down, then suddenly laughed, a laugh that left the well-informed director somewhat bewildered.
Should he try to persuade her from the perspective of national interests?
Will it be of any use? Times have changed; their status is now special.
Wang Xiao laughed and shook his head: "Sir, although I'm not smart, you don't have to treat me like an idiot."
Director Yuan straightened his expression, wanting to emphasize to her: upholding national interests is not foolish, but a matter of great wisdom. Since she understood why the government intervened to protect national interests during the 327 Treasury bond incident, she should now understand that the devaluation of the Hong Kong dollar is absolutely unacceptable.
Wang Xiao laughed and added, "Only an idiot would short the Hong Kong dollar. The situation in Hong Kong is different from that in Thailand."
She waved the beer in her hand, enthusiastically urging Director Yuan, "Try it! This beer is made from broken rice grown on my farm. Really, farming in South Africa is great."
But Director Yuan was no longer listening to farming advice. He took a sip of beer and continued his topic: "So, Mr. Wang, what kind of different method do you think it is?"
Wang Xiao laughed and said, "Hong Kong's banking system is much stronger than Thailand's, and the Hong Kong government has little foreign debt. So in fact, only the people of Hong Kong can decide whether to abandon the linked exchange rate system."
Director Yuan sighed: "But people's ability to endure pain has a limit. When it becomes too painful, they will give up."
Wang Xiao still had a smile on her face, but the smile didn't reach her eyes. She shook her head, her voice carrying a hint of the coldness of beer: "No, if there is no choice, one cannot give up."
She tapped her beer glass lightly with her finger. “The Sanwan Reorganization was a process of selection. Hong Kong has just gone through such a Sanwan Reorganization. Those Hong Kong people who had no confidence in Hong Kong had already emigrated before July 1st. What’s left are people who believe in Hong Kong’s future. They have no reason to give up the Hong Kong dollar.”
Director Yuan was quite pragmatic and wouldn't just listen to pretty words. He pointed out the flaws in Wang Xiao's words: "But among those who stayed, there are many who wanted to leave but couldn't."
Wang Xiao smiled, this time the smile reached his eyes, but there was a hint of coldness in it: "They are Hong Kong's most solid foundation. Because they have no other choice."
It's often said that the most patriotic people are always the lowest-paid workers, because others can run away, but they can't. They have no choice but to rely on the country.
It sounds dark and not honorable, but a gentleman judges by actions, not intentions; what matters most is how one acts.
Wang Xiao laughed and shook his head: "So anyone who knows a little history and international politics wouldn't be out of their mind to short the Hong Kong dollar. How many years of history does the United States have? Only 200 years. China has a history of 5,000 years. How could it possibly operate according to their so-called financial truths?"
She blinked. "So I bet anyone who doesn't believe in this and shorts the Hong Kong dollar will suffer a huge loss."
She shook her head vigorously. "I won't do such a stupid thing."
Director Yuan sighed, "Unfortunately, not everyone in this world has a brain as sharp as Mr. Wang's."
Wang Xiao said in a serious tone: "So you have to educate people from all directions and let more people know this basic principle."
As more people approached with wine glasses, Wang Xiao nodded softly to the guests from a distance, without looking in Director Yuan's direction: "At most, they'll just be bearish on the Hong Kong stock market, make a little money, and then take their profits."
The first move by countries around the world to protect their currencies is to raise deposit interest rates, but this inevitably leads to stock market turmoil.
The Hang Seng Index experienced a decline in August of this year.
Wang Xiao smiled and said, "I'm not bearish on the Hong Kong stock market, isn't that fair? So, sir, this is enough to show my sincerity. I'm not a fool, I won't mess with the Hong Kong dollar. You should focus your energy where it's needed."
Don't waste your time on me, it's pointless.
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Good morning! [Let me see] The financial data mentioned in the article is generally accurate; I've checked the information, and I couldn't have made it up. [Hugs]
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