Rebirth of the Capital Legend

Chapter 252 Global capital’s hunting and short squeeze!

"Even if Mr. Su decisively stopped losses and closed his positions at this time, he would have suffered a loss of at least $2 million, right?" Gu Huaming said. "If he left with a huge loss, his reputation in the domestic financial circle would definitely be greatly damaged."

Gu Chijiang said: "According to the current position data of various institutions, in the pound exchange rate trading market, the number of short orders held by the 'Hua Yi Cheng Yuan No. 1' hedge fund headed by Mr. Su is already the largest number of short orders held by institutions. Such a huge short position.

If you want to exit the market, you must cover your long positions on a large scale.

In other words, the stop-loss closing of this institution will inevitably cause the pound exchange rate to surge further.

The continued surge in exchange rates will increase the cost for this institution to close its positions.

not to mention……

Now many capital institutions around the world are keeping an eye on the movement of funds of 'Hua Yi Cheng Yuan No. 1'.

Once people discover this capital and have the idea of ​​closing positions on a large scale and fleeing the market, they will inevitably increase their long positions further and continue to force a short squeeze.

So, in this difficult situation.

The funds of the 'Hua Yi Cheng Yuan No. 1' fund want to close all the short positions in their hands.

That's not something that can be solved by just losing $2 million.

According to my estimation, if this capital wants to leave the market regardless of everything and completely close the 8.5 short positions in its hands, the pound exchange rate will at least rise by 500 points.

And 500 points means that the other party will lose at least US$4 million.

Only then can the final closing of the position be completed.

This loss... I'm afraid Mr. Su from Huayi Capital can't afford it at all."

Gu Huaming was shocked when he heard his father's words. He said hurriedly, "Then according to what you said, father... the only way for the Su family is to go bankrupt?"

"Theoretically, the other party has two options," said Gu Chijiang. "Either continue to hold on to their positions and wait for the pound exchange rate to fall back to a relatively low level due to subsequent news changes, and then gradually cover their losses. However, this option... given that the market is generally bullish on the pound exchange rate and that all the long-term institutions around the world are intent on shorting, is basically a path to a slow death with little hope.

Another way is to concentrate funds based on market news.

Taking advantage of emotions and continuously investing funds, they guide the trend of the pound exchange rate in the form of new short orders and suppress bullish sentiment.

As long as the bulls' momentum can be suppressed, causing the pound exchange rate to fall briefly, and at the same time some bulls can cover their short positions and close their positions, then this fund will have the opportunity to reduce the current huge losses and complete a large-scale liquidation.

However, to do this...

First, it requires the cooperation of negative news, and second, it requires a huge amount of funds to support it.

At present, it is obvious that Mr. Su does not have much money to invest, and the market news does not support it.

So, on the whole, if Mr. Su is not more decisive, he will have to cut his losses and leave the market.

If you delay any further...

I’m afraid the only outcome is a margin call.”

"Haha... Great." Gu Huaming laughed. "At the dinner party hosted by Huifeng Bank, this guy was arrogant and looked down on everyone. I didn't expect... retribution to come so quickly."

"This guy is still too young." Gu Chijiang shook his head and laughed, "He has never experienced the cruelty of the foreign exchange market, but he dares to invest hundreds of millions of dollars in a gamble. Does he really think that the global foreign exchange financial market, like the A-share market, is played by a bunch of rookies?
This is the foreign exchange market.

Participants include not only hot money and retail investors, but also major global investment institutions, hedge fund companies, and even central banks of various countries.

And the institutional groups that are clustered there, no matter which one, are all giant crocodiles that eat people without leaving any bones.”

He has been in the financial market for nearly twenty years, and even now... he is still trembling with fear and treading on thin ice. It is really hard for him to imagine how Su Yi, a young man in his twenties with only a few years of market experience, dared to gamble his entire fortune on the exchange rate of the British pound, which is known as the 'demon pound' in the foreign exchange financial market.

Just like him, at this moment, I also don’t understand.

There are also a number of well-known investment institutions and even state-owned institutions in the Mainland and Hong Kong that continue to pay attention to the changes in Huayi Capital's short positions in the pound.

"Meng, what do you think of the current situation of Huayi Capital?"

In a quiet teahouse somewhere in Hong Kong, Kong Fansheng, investment manager of Huayin International, asked his colleague.

Meng Shengfei, Kong Fansheng's colleague and manager of Huayin International's second investment department, responded, "Are you talking about the Huayi Chengyuan No. 1 fund product under Huayi Capital, which is deeply trapped in the pound exchange rate crisis and is being hunted and forced to sell by major global capital institutions?"

"Yes!" Kong Fansheng said, "That's it. What do you think?"

Meng Shengfei replied: "Hey, Mr. Su is still too young. Before investing, he probably didn't fully consider the extreme investment risks in the foreign exchange market. Foreign exchange contract trading is completely different from stock trading. With the support of huge leverage, the investment risk factor can be said to be more than ten times that of the stock market.

Indeed, Mr. Su has achieved a hundred-fold increase in performance in half a year in the domestic A-share market.

But I always feel that he is treating the foreign exchange market as the stock market, without showing a mature risk control management mechanism, and without foreseeing the wolf pack tactics of major global capital institutions, which has led to the current dilemma of this fund. "

"Yeah." Kong Fansheng nodded slightly. "You are right. But I always feel that Mr. Su has been able to achieve such brilliant investment results in the A-share market during several rounds of stock market crashes. He doesn't seem to be someone who has no idea about risk management. And I heard that Huayi Capital's 'Huayi Chengyuan No. 1' hedge fund product is the company's proprietary fund product. Its capital comes from the capital that Mr. Su accumulated in the A-share market. This person dares to bet all his accumulated funds. Logically speaking... he should have made sufficient investment plans and risk management."

"Maybe." Meng Shengfei thought for a moment and said, "I still can't figure out why Mr. Su is so bearish on the British pound exchange rate."

Kong Fansheng said: "Based on the fundamental feedback of the British economy, the current exchange rate of the pound does have the risk of further decline. Moreover... from the long-term trend, the exchange rate of the pound has been in a continuous downward trend for several years. From a certain analytical perspective, it makes sense to be bearish on the exchange rate of the pound."

"They shouldn't have established such a large position at the beginning of their entry." Meng Shengfei said, "Also... this 'Hua Yi Capital' company also has big problems with its internal management. The internal core transaction data was leaked almost not long after the institution established its position, and it became a hot topic. Isn't the internal control... too big a loophole?" "I find this strange, too." Kong Fansheng said, "I always feel that this institution has been targeted from the beginning. Its positions are basically transparent, and once such a large position is completely exposed to the counterparty institutions, how can it not be accurately sniped?"

"Alas, it's probably impossible for Huayi Capital to get out of this unscathed now." When he said this, Meng Shengfei couldn't help but sigh and continued, "For many years, there have been no successful cases of overseas Chinese investment institutions, whether state-owned or private. This is... really discouraging."

Kong Fansheng responded: "There is nothing we can do about it. How many years has our country's financial history been developed? How many years has it been developed in the West? The gap is more than 100 years. Therefore, it makes sense for China to restrict foreign investment in the financial sector and restrict foreign investment from large-scale involvement in the domestic financial market."

"The key is... it's not pleasant to be reaped every time." Meng Shengfei said, "Old Kong, can you analyze how this Mr. Su can get out of this unscathed?"

Kong Fansheng said: "I really don't know. At present, it is impossible to get out of this unscathed. The fangs of the global hunting institutions have all been exposed, and the pound exchange rate market has formed a trend of continuous net long squeeze. As long as the Bank of England does not intervene forcibly to suppress the pound's exchange rate, the pound exchange rate can only break upward in the short term under the continuous squeeze of longs.

Moreover, considering the current exchange rate of the pound.

I guess that the loss from Mr. Su’s current short position must have exceeded US$1.7 million.

Remember a few days ago, when Mr. Su’s short position losses reached more than 7000 million US dollars, he had no choice but to return to China to raise funds, right?

According to market rumors, Mr. Su has raised nearly $1 million in funds.

Now it seems that the $1 million reserve fund has almost been lost.

If this continues...

I am afraid that if the pound sterling exchange rate surges by 300 basis points, the hedge fund under Huayi Capital will be completely liquidated. "

"Is there no room for maneuver or reversal?" Meng Shengfei asked.

"Unless market expectations change, short positions in the pound exchange rate market will surge in a short period of time, and short-selling investors will be able to quickly withstand the pressure of long positions and quickly suppress the pound exchange rate." Kong Fansheng said, "But to do so... it will require huge funds, and simply using funds on the market to compete with these large institutions hunting around the world may not necessarily truly reverse the shape and trend of the pound exchange rate."

"If we want to suppress the current bullish momentum, we will probably need tens or even hundreds of billions of dollars, right?" Meng Shengfei said, "I heard that in the past two days, the net long position in the pound exchange rate market has hit a six-month high of more than 20 lots, and the total long position of the pound held by global institutions has reached about 50 lots. To be honest, the accumulated amount of long and short orders is a bit scary!"

Kong Fansheng said: "It's more than scary, it's extremely scary."

"You say... should we get involved and give a hand?" Meng Shengfei said.

Kong Fansheng smiled and said, "Do you want to go short or long?"

Meng Shengfei replied: "Nonsense, he must have been shorting. Going long at this time would just add fuel to the fire, wouldn't it?"

"Adding fuel to the fire is better than being surrounded by bulls." Kong Fansheng said, "In this battle between bulls and bears, the outcome has probably been decided. It doesn't really matter whether you help or not."

"So... you don't plan to participate?" Meng Shengfei said.

Kong Fansheng replied: "I'll just wait and see how this drama unfolds. Although we don't have to be responsible to investors, the funds we use for investment are all state capital, and we need to be responsible to the state. Although I sympathize with Mr. Su and admire his courage, it is wrong to invest funds in a market where there is a high probability of losing money."

"You are being arbitrary," Meng Shengfei said. "The changes in the financial market are extremely volatile, and no one can predict the future results. Since the fundamental analysis shows that the pound exchange rate should be downward in the long term, the short-term market game may result in the shorts winning.

Furthermore, in fact...

I think that in the current pound exchange rate market, the net long position is far greater than the net short position.

In fact, it is relatively favorable for the downward development of the pound sterling exchange rate.

After all, once an unexpected event occurs in the market, these long positions will inevitably be trampled in order to cover their positions, causing a serious imbalance in the long and short positions in the market. "

"You are right," Kong Fansheng replied, "but the probability of this happening is extremely small. From the perspective of market analysis, the highest probability is that the largest short position holder in the current pound exchange rate market of Huayi Capital is forced to liquidate or is forced to cover positions on a large scale. Only then will the pound exchange rate have a significant correction. Before that... the major global capitals will definitely invest further funds to continue to force shorts and pressure Huayi Capital to cover positions. So... no matter what, I won't bet on it."

And just when the two people had different opinions.

Almost as Kong Fansheng expected...

The major international capital institutions that were hunting for Huayi Capital have increased their long positions, further pushing the pound exchange rate upward.

At the same time, under Su Yi's attention.

As the pound sterling exchange rate broke through the 1.5150 mark, the holding losses of the "Hua Yi Cheng Yuan No. 1" fund product also reached US$2 million.

However, Su Yi watched the fund products' losses continue to expand.

In particular, when he noticed that in the pound exchange rate market, the net long position had reached the level of 25 lots due to the continuous short squeeze by global capital institutions and even the continuous output of bullish and long positions, the look in his eyes not only did not show any pessimism or panic, but became sharper and more excited.

Take advantage of market trading hours to enter the evening US trading session.

It also takes advantage of the time when there are the most exchange rates and the hottest discussions among investors at home and abroad, and on the Internet.

Su Yi opened domestic and foreign online investment exchange platforms, and in his capacity as the product manager of "Hua Yi Cheng Yuan No. 1 Hedge Fund", a hot money investor at the "Financial Street Fuxing Road" trading seat, and the founder of "Hua Yi Capital", he sent out a declaration of war to the major global capitals that had gathered in the pound exchange rate market to form a squeeze to suppress him.

At the same time, he also uses his influence in the domestic financial circle.

I published an article that deeply analyzed why I was bearish on the British pound exchange rate and why I wanted to short the British pound exchange rate.

It also called on domestic retail investors and hot money groups to use their spare money to short the pound exchange rate.

(End of this chapter)