Rebirth of the Capital Legend

Chapter 251: Deep in the market vortex of short squeeze!
Faced with the rapidly expanding losses in the fund's holding accounts, Su Yi remained calm, without the slightest panic.

Although Qu Zecai was nervous and felt under great pressure, he still directed the traders in the trading room in an orderly manner to continue increasing their short positions based on the current position of the pound exchange rate, and used the funds raised by Su Yi over the weekend to replenish the margin of the main holding accounts.

While a group of traders are watching the market.

During the Asian session, the exchange rate of the pound fluctuated relatively little, and it has been oscillating in the range of 1.5010 to 1.5050.

But when the time enters the European trading session.

The exchange rate fluctuations of the British pound have become relatively intense.

During this stage, the pound exchange rate hit the 1.5050 mark several times, but failed to effectively break through this level.

But then, it was the US trading session in the evening.

As the market became more active and more institutions entered the market to go long, the pound sterling exchange rate finally broke through the 1.5050 mark and continued to rise to 1.5070 before it re-formed a volatile trend.

After a night of fierce fighting.

When Tuesday, May 5st, arrived, the market returned to the Asian trading session.

The 'Hua Yi Cheng Yuan No. 1' fund product managed by Su Yi had a total short position of 8500 million US dollars in British pounds, and the loss had reached 1.4 million US dollars.

This also means...

Su Yi raised about $1 million from various sources over the weekend.

It was sold out within just one day after it was put on the market.

Moreover, whether it was himself, Qu Zecai, or a group of traders in the company, they could all clearly feel that the pound exchange rate had formed a powerful upward trend after breaking through the 1.5000 mark. In other words... their current positions were going against the overall trend.

"Boss Su, our position losses have increased again."

Qu Zecai had just sat down in front of the main computer in the company's trading room. After looking at the summary, the total loss was as high as 1.4 million US dollars, and he hurriedly reported it.

During this period of time, his nerves were tense.

Even if I rest, it is difficult to sleep soundly.

After all, the fund's holding accounts experience profit and loss fluctuations of up to millions of dollars almost every second.

Coupled with the 100-fold leverage of the foreign exchange contracts, he was really afraid that something unexpected would suddenly happen in the market and the fund's positions would be liquidated instantly.

"Well, it's okay." Su Yi said with a smile, "This loss was already within my expectations."

As he spoke, Su Yi glanced at Qu Zecai with a smile. Seeing how bloodshot his eyes were, he couldn't help but ask, "What's wrong, Manager Qu? Didn't you sleep well last night?"

"I really didn't sleep well." Qu Zecai coughed lightly and replied, "Maybe I haven't adapted to the weather in Hong Kong City yet."

Su Yi nodded slightly and said, "Then you have to adapt quickly, there are still tough battles to fight later."

Qu Zecai responded and then returned his gaze to the trading board.

He felt that as an experienced asset manager, he would inevitably feel nervous and uneasy when faced with such huge positions and high leverage. He didn't understand why Su Yi could remain so calm?

Of course, even though he didn't understand, he really admired Su Yi from the bottom of his heart.

Hundreds of millions of dollars, his entire fortune, were gambled on the highly uncertain pound exchange rate, yet he was still able to remain calm and talk and laugh freely. This is something that not many people can do.

While the two were talking...

Wang Huaijin walked into the trading room and reported to Su Yi: "Boss Su, the latest news is that 'Tianhe Capital' has also gone out of business, and... I heard that the Bank of England has sold foreign currencies again and conducted market transactions."

"Yeah." Su Yi nodded, "Any other important news?"

Wang Huaijin thought for a moment and then said, "There is a rumor that the British people are very dissatisfied with the economic stagnation and decline in the past two years and are clamoring to break up with the EU. It's ridiculous... This is not a boyfriend-girlfriend relationship, can we just break up?"

"Oh?" Su Yi smiled and said, "The fact that such a voice can be heard shows that some people in the British cabinet are also dissatisfied, and such a rumor should not have emerged in a short period of time, right? When such a voice becomes louder and louder, many people can no longer ignore the existence of this voice."

"Mr. Su said...is there something to be done here?" Wang Huaijin asked.

Su Yi responded: "When the landlord has no surplus food, he naturally can't take care of the poor relatives around him."

"Mr. Su, do you think this matter will get bigger and bigger?" Qu Zecai turned around and asked.

Su Yi said: "Whether it can become a big deal or not, we just need to wait and see. In any case... this news cannot be ignored. Mr. Wang, have someone continue to track and collect information in this regard to see what response and progress the British cabinet will have in the future."

According to the historical memory in his mind.

June 6rd is the day when the UK votes to leave the EU.

He calculated the time and felt that it was time for the British Cabinet to initiate the corresponding internal referendum procedures under the constant pressure of public opinion.

Of course, the rumors about public dissatisfaction and the feeling that a group of poor relatives within the EU are hindering their good lives can be spread across the ocean to Hong Kong. Su Yi believes that the time for the British cabinet to launch a referendum process must be very close.

"Okay." Wang Huaijin responded.

Su Yi nodded slightly, pondered for a while, and then asked: "Mr. Wang, at this moment, according to public market information and data from major exchanges, what are the positions of major institutions on the British pound exchange rate?"

Wang Huaijin said: "From the relevant information and data I have collected, our institution still has the largest short position in the current pound exchange rate market, accounting for more than 9% of the entire short position in the market. As for long positions, Huifeng Global Asset Management's 'Universe' hedge fund holds more than 3 long contracts, a hedge fund under 'Pacific Capital', and the foreign exchange investment department of 'Goldman Sachs' Group, all hold more than 2 long contracts... In general, major investment institutions around the world are basically our counterparties.

Oh, right……"

Wang Huaijin paused and continued, "What is quite strange is that the Evolution No. 1 hedge fund of Aberdeen Asset Management actually holds more than 1 short contracts for British pounds. It is currently the only internationally renowned investment institution that holds a huge amount of short orders in line with our judgment."

"Aberdeen Asset Management's 'Evolution No. 1' fund?" Su Yi pondered for a while and asked, "Is the fund manager of this fund Mr. Frederick?"

Wang Huaijin was somewhat surprised and asked, "Mr. Su knows this person?"

"I've heard of it." Su Yi said, "In the past 'Swiss Franc Black Swan' incident, this person had a legendary operation performance. Since he is in charge of the fund, it's not surprising. It seems... there are still many people in this world who can really see the opportunities and are really smart." Just as Su Yi was sighing...

Hong Kong City, inside the Aberdeen Asset Management branch, inside the trading room of the 'Evolution No. 1' hedge fund.

Frederick looked at the current long and short institutional positions data of the pound sterling exchange rate in the hands of the researcher, and couldn't help but have many questions about the 1-plus pound short contract positions held by the 'Hua Yi Cheng Yuan No. 8.5' fund product managed by Su Yi.

He didn't quite understand why the other party didn't make any arrangements to reduce positions or stop losses in the face of huge losses.

"Dennis, you said you have met Mr. Su from Huayi Capital before?" Frederick turned to Dennis, a core trader of the fund who he believed had great potential and was very talented in trading, and asked, "What kind of person do you think he is?"

Although he is not the other party's counterparty.

But after discovering that the other party's position was so abnormal, he still wanted to know more about this so-called "teammate".

Dennis thought for a moment and responded, "He seems to be very polite and smart. He has deep insights into various derivative transactions in the financial market and transactions themselves. Moreover, this guy once created a myth of a hundredfold return in half a year in the A-share market in China."

"Why do you think he is so generous and persistent in shorting the pound exchange rate?" Frederick asked. "More than 20 years ago, Soros dared to short the pound exchange rate because he saw that the Bank of England's foreign exchange reserves were limited and the global economic crisis was coming. There was an obvious bubble in the pound exchange rate. But now the situation is completely different, and it seems that Mr. Su has no ability to pry the Bank of England."

Dennis pondered for a while and said, "Although it is difficult for me to guess his motives, I believe... he definitely made up his mind to do this after careful consideration. Maybe there are some potential major negative factors in the pound exchange rate expectations that we have not expected or seen."

"What could be the negative factor?" Frederick thought for a while, but still had no idea.

"Then teacher...what is your motivation for asking us to short the pound exchange rate?" Dennis asked after a pause.

Frederick smiled and said, "First, the UK's economic growth performance in the next one or two quarters, or this year, will be very poor. Second, from a trading perspective, the market will never let most people make money. There are so many net long positions in the pound exchange rate market now. Once there is a disturbance in the news, the long positions will be closed and covered, and the pound exchange rate will go down significantly. Moreover, the 1.5000 exchange rate mark is not so easy to maintain. Besides... the purpose of the Bank of England itself is to maintain the stability of the exchange rate, not to make the currency appreciate rapidly."

"Yeah, I think so too," Dennis said. "I think that this time, Huayi Capital's huge investment in shorting the pound exchange rate and making such a big fuss is like setting a big trap in the pound exchange rate market to lure in many long institutions."

"Oh? Your statement is quite novel." Frederick laughed.

Dennis scratched his head and said, "I'm just guessing. I always feel that everyone's expectations in the current market seem to be too consistent. This is not necessarily a good thing in the financial market."

"Well, consistent expectations are often difficult to achieve." Frederick nodded.

"Teacher, so according to you...should we continue to increase our short positions on the British pound exchange rate?" Dennis asked.

Frederick said: "That's not necessary. A position of 1000 million US dollars is not a small amount for us. Let's wait and see how market expectations and news change. If there is really a long or short trap here, it will surely reveal itself over time."

After saying this, Frederick shifted his gaze away from the institutional holdings data submitted by the researcher.

Shifted to the GBP exchange rate which is undergoing ongoing trading changes.

After continuous long and short trading in the market, the pound exchange rate at this time remained fluctuating around 1.5070 points, and there was considerable resistance both upward and downward.

However, when the market is trading.

Continue to cross the Asian session and move into the European and American sessions.

Especially when many institutions heard about the pound exchange rate, the largest short position of the fund "Huayi Chengyuan No. 1" with 8.5 short orders was on the verge of a margin call.

More and more speculators and institutional groups began to accelerate their entry into the market and continue to squeeze out the shorts.

Accompanied by further pressure from the bulls.

The pound sterling exchange rate once again broke through the range of fluctuations and accelerated upward. On Wednesday, June 6, the exchange rate was pushed to the 1 mark in one fell swoop.

However, just as Su Yi was in charge of the 'Hua Yi Cheng Yuan No. 1' fund product.

When the pound exchange rate broke through the 1.5100 mark, the total loss of 8.5 standard contracts reached US$1.7 million.

On the news front that affects the pound exchange rate, important news has finally arrived.

During the European session on June 6, at around 1 p.m., the British Cabinet meeting was held to review the issue of "Brexit referendum" proposed by various regions.

Once this news came out...

The pound sterling exchange rate is from the highest point of the session

It jumped from 1.5129 points to around 1.5023 points, a flash crash of more than 100 basis points.

Thanks to the plunge in the pound sterling exchange rate, the holding losses of the "Hua Yi Cheng Yuan No. 1" fund product managed by Su Yi also quickly reduced by more than US$5000 million.

However, the brief plunge did not really affect the trend of the pound exchange rate.

It has not been able to reverse the actual long and short situation.

After the news was announced, major global investment institutions and well-known investment research institutions all interpreted the British cabinet's deliberation on the "Brexit referendum".

98% of world-renowned institutions.

They all believe that the British Cabinet is unlikely to pass this proposal, and that no matter how subsequent events develop, the probability of Britain leaving the EU is zero.

Due to the consensus expectations of the vast majority of institutions around the world.

The bulls in the market launched a strong counterattack near the 1.5000 mark of the pound exchange rate.

As a result, before the evening US trading session began, the pound sterling exchange rate had fully recovered its losses and returned to 1.5129.

"Haha... With this trend of the pound exchange rate, Huayi Capital, as the main short seller, should be going to collapse, right?" Seeing that the pound exchange rate returned to a high level after the bad news and continued its upward trend, Tianhe Capital, which had already entered the market with a large amount of long positions, was in the Gu family villa in Hongcheng. Gu Chijiang was in a very comfortable mood and said with a smile, "If this trend continues, Mr. Su of Huayi Capital will not stop loss and close his positions. I'm afraid he will die without a burial place."

"It seems that the Fang family... bet on the wrong person this time." Gu Huaming, who was standing by, was also very happy when he heard his father's words.

Gu Chijiang nodded slightly, his eyes gradually becoming sharper: "No matter what, the upward trend of the pound exchange rate has already formed, and on the market, the bulls have become overwhelming. Coupled with the dovish remarks of the Federal Reserve, the expectation of interest rate hikes has weakened, and the US dollar will definitely be weak for a period of time. This will create a stronger upward momentum for the pound exchange rate. No matter what... no matter how you look at it, it is impossible for this President Su to get out of this unscathed."

(End of this chapter)