Rebirth of the Capital Legend

Chapter 261 The British Pound Exchange Rate Trading Market as the Storm Approaches!
"Great minds think alike." Su Yi smiled and extended his hand to Frederick again, saying, "Then I hope we can cooperate happily in the pound exchange rate market and make a lot of money."

Frederick also shook Su Yi's hand again and said, "Mr. Su's insight, courage and spirit are indeed admirable. I am very lucky that I am not standing in the position of an opponent with Mr. Su at this time, but standing in the position of a friend with the same interests. Otherwise, the consequences would be unpredictable."

Su Yi continued with a smile: "I am just standing in what I think is the right direction of the market based on my own understanding. I feel lucky to have such a pleasant conversation with Mr. Frederick."

"Then let's hope that the goddess of luck is on our side." Frederick said, raising his glass.

Su Yi clinked glasses with him with a smile and said, "The goddess of luck always rewards the brave, and the truth is often in the hands of a few people. I believe that we will have a pleasant cooperation."

Frederick nodded slightly, expressing his deep agreement with Su Yi's words.

Then, after three rounds of drinks, the two discussed some experiences and insights on market transactions.

Later...

As the conversation deepened.

The more Frederick discovered, the more he realized that although Su Yi was young, he had profound market trading experience and insights, and was indeed a genius in financial trading.

Similarly, as he got to know Su Yi better.

Regarding the future of cooperation between the two parties and the subsequent direction of this battle between bulls and bears in the pound exchange rate.

Frederick's confidence grew stronger and stronger.

Later, around eight o'clock in the evening, after a pleasant conversation, the two walked out of the restaurant and went their separate ways.

As luck would have it, when Su Yi and Frederick were leaving, they ran into Sato, the main hedge fund manager of Mitsui Yoshitomo Investment Company, Godfrey, the manager of Huifeng Global Hedge Fund, and Gu Chijiang of Tianhe Capital in the restaurant.

"Hey, isn't that Mr. Frederick, the hedge fund manager of 'Aberdeen Asset Evolution No. 1'?"

Sato was surprised when he saw Frederick who had just disappeared from the restaurant door.

"Who is the young man next to Mr. Frederick?" Gu Chijiang of Tianhe Capital also had a puzzled look in his eyes. "He doesn't look like an internal executive of Aberdeen Asset Management, does he?"

"That young man is Su Yi from Huayi Capital, who has been in the limelight recently." Godfrey said, "I saw this guy at the party hosted by our organization last time. He was quite arrogant at that time, far from the embarrassing situation now that the main positions are trapped in the pound exchange rate market, the entire main fund is in a short squeeze situation, and the positions on hand are suffering from large and continuous losses."

"It's him?" Sato narrowed his eyes, "He is indeed very young!"

Gu Chijiang laughed and said, "In the financial market, youth is not an asset, but a disadvantage, because youth necessarily means insufficient market investment and trading experience, and is easily affected by emotions. In judging market trends, it is reckless and underestimates investment risks.

Based on Mr. Su’s current trading operations in the British pound exchange rate market.

He basically made all the trading mistakes that these young people made.

Therefore, the praise that many people in and outside the circle gave to this young man in the early stage now seems... somewhat ridiculous."

"Looking at his recent operations in the pound exchange rate market, he does not look like an experienced and mature investor." Sato responded. The doubts in his eyes not only did not dissipate, but became more intense. After a pause, he continued, "But how did this person get involved with Mr. Frederick?"

For Sato.

He believed that the young man Su Yi and Huayi Capital, which had limited funds, were insignificant and could not determine the actual direction of the market.

However, Frederick's weight in his heart was completely different.

Not to mention that Aberdeen Asset Management is one of the top 1 asset management institutions in the world with strong capital strength. The scale of funds of the hedge fund "Evolution No. " headed by Frederick alone is as high as tens of billions of US dollars. What's more, Frederick's earth-shaking short-selling campaign on the "Swiss Franc Black Swan" at that time really shocked many institutions and asset management managers in the global asset management industry.

And there is...

Sato is aware of the current pound exchange rate in the market.

The 'Evolution No. 1' hedge fund headed by Frederick also holds a considerable amount of short positions.

If the other party is really determined to short the pound exchange rate, he will be involved with Huayi Capital, which provoked this long-short battle in the pound exchange rate market.

As the opponent, Sato couldn't help feeling a little uneasy.

After all, at the current stage, the fund products he is in charge of have already established a large number of long positions on the pound exchange rate.

If the follow-up fails to force a strong short squeeze and force the main short seller "Hua Yi Capital" to cover his positions and stop losses, then when the bullish sentiment on the market declines, the huge long positions in his hands will be in danger.

"It's a bit strange." Godfrey pondered for a while and said, "But the current upward trend of the pound exchange rate has already formed, and the bullish sentiment on the market is getting stronger and stronger. There are continuous short investors covering their positions and stopping losses. Under such circumstances, even if the two major short-selling institutions, Aberdeen Asset Management and Huayi Capital, join together, they can't change the market trend, so there is no need to worry."

Gu Chijiang nodded slightly and responded, "Mr. Godfrey is right. In the current pound exchange rate market, the overall trend of the pound exchange rate has been determined. It cannot be changed by personal ability or the financial strength of a single institution. On the contrary, under the current situation, I hope they can unite and continue to invest more funds to cover their positions.

Only when the short positions of these two major short-selling institutions become larger and larger.

This will help the pound sterling exchange rate to surge in the short term after the subsequent extreme short squeeze."

"Mr. Gu, you should not underestimate Mr. Frederick from Aberdeen Asset Management." Due to national culture and personal character, Sato is relatively more cautious than the other two in terms of investment and trading. After a pause, he said, "If the main hedge fund 'Evolution No. 1' managed by Frederick really wants to short the pound exchange rate with all its strength, it will not be easy for us to force the short sellers to surrender in a short period of time."

"I'm not underestimating them," Gu Chijiang said. "I just think that with the Bank of England's continued repurchases, the trend of the pound sterling exchange rate will only go up. There is no room or motivation for it to fall. This is not subject to human will, nor will it change due to the intervention of a certain institution."

"Mr. Gu is right." Godfrey said with a smile, "I don't deny that Mr. Frederick is an outstanding hedge fund manager and a seasoned foreign exchange financial market trader, but I believe that the upward momentum of the pound sterling exchange rate at this historical low is far stronger than the downward momentum."

"Although I am optimistic..." Sato said, "I think we should still be cautious."

"When did Mr. Sato become so cautious?" Godfrey laughed.

Sato coughed lightly and said, "This is not because I am hesitant. I just think that no matter what time it is, we still need to respect the market and remain in awe of the market."

"You're right...," Godfrey said. "However, I can tell you, Mr. Sato, that according to the internal information we have obtained, the Bank of England will continue to conduct market operations in the next phase, further selling dollars and recovering pounds to stabilize the pound market exchange rate."

"Is it true?" Gu Chijiang asked excitedly.

If the Bank of England further sells off its US dollar reserves and buys pounds, thereby further stabilizing the pound exchange rate, then the Bank of England will provide a bottom line and support from this huge long institution.

It can be predicted that the pound sterling exchange rate will continue to soar in the future, continuing to put pressure on short-selling institutions in the market.

Godfrey smiled and said, "Of course it's true."

Sato heard the inside information Godfrey revealed and saw his confident look. Thinking of the background of Huifeng Bank as a giant in the British banking and asset management industries, he was stunned for a moment, and then believed Godfrey's words without a doubt. He smiled and said, "No wonder Mr. Godfrey's 'Universal' hedge fund is still increasing its long positions in the pound exchange rate. It turns out that Mr. Godfrey has seen the bottom card a long time ago!"

"This is not a trump card," Godfrey said. "The Bank of England's monetary policy orientation is only an important factor in guiding the pound's exchange rate to strengthen. The underlying logic that determines the pound's continued rise and continued breakthrough is still the Fed's continued dovish remarks and the recent rebound in British economic data."

Sato nodded slightly and said, "It seems that this battle over the pound exchange rate will be Mr. Frederick of Aberdeen Asset Management's Waterloo."

"If Mr. Frederick is deceived by Mr. Su of Huayi Capital and continues to increase his short positions on the pound exchange rate..." Godfrey smiled and said, "What awaits Mr. Frederick may not just be a simple career 'Waterloo'. His actions are bound to bring huge losses to Aberdeen Asset Management Group and damage the reputation of its asset management business."

And as Sato and Godfrey talked further...

Gu Chijiang's heart was also surging and churning at this moment, as he was thinking about further increasing his long positions.

After all, in his opinion, with the advantage of insider information, the coordinated efforts of so many world-renowned asset management institutions, and the assistance of countless enthusiastic and aggressive long retail investors in the market, he does not believe how low the pound exchange rate will fall next.

And firmly believe that this is a huge speculative opportunity.

It is a huge opportunity that will make him famous in Hong Kong's financial circle and double his assets.

It is because the major institutions on both the long and short sides either secretly cooperate, exchange information, aggressively increase their positions, or mislead retail investors in the market to aggressively pursue their positions.

As market trading hours progress.

In the pound exchange rate market, long and short positions have returned to the stage of synchronous growth.

"My goodness, in the pound exchange rate market, the total long position has exceeded 180 million lots, and the short position has also reached a new high for the year."

Faced with the increasingly fierce confrontation between bulls and bears in the pound exchange rate market.

During the European trading session on June 6, at the headquarters of FXCM International, in the Market Risk Management Department, Hubert, the Risk Management Manager, was so nervous that his heartstrings were tense.

Recently, both bulls and bears have continued to invest their strength in the British pound exchange rate market.

This extremely high level of market activity and extremely terrifying long and short positions made him terrified, fearing that the "Swiss franc black swan" incident would happen again.

He remembers when the 'Swiss Franc Black Swan' incident broke out.

In the entire Swiss franc exchange rate market, long and short positions are less than half of those in the current pound exchange rate market.

That is to say...

Under this long and short position volume, once the longs or shorts are stimulated by extreme news, there will be an instant collapse and defeat.

Then, the resulting fluctuation in the pound exchange rate may exceed the fluctuation in the Swiss franc exchange rate in the original "Swiss franc black swan" event.

And once something like this happens.

This is not only a huge blow to countless investors and speculators in the foreign exchange market.

It is also a catastrophic blow to their company as a market maker.

"It's not just the increase in long and short positions." Angus, a risk control market monitor in the risk control department, said, "The net long position is also setting a new high, approaching 65 lots, Minister... In the pound exchange rate market, the probability of extreme volatility is increasing. I think our company should limit the number of pound exchange rate positions that customers can open on our trading platform, and even limit customers from opening standard long and short pound exchange rate contracts."

"I think so too." Hubert frowned, feeling that the danger was getting closer.

"No matter what, we must report this to President Isaac." Hubert paced back and forth in the office for a few times, gritted his teeth, and made up his mind, "Those idiots in the trading department and the customer department are so short-sighted. If we let them continue like this, when extreme market conditions come, the company will go bankrupt in an instant. We can't let it go on like this, we must not let it go on like this..."

Having said that, Hubert hurried out of the office and came to the office of President Isaac.

After listening to Hubert's report, Isaac frowned for a moment.

However, this time, he did not think that Hubert was exaggerating like he did last time. Instead, he pondered for a moment and quickly convened an internal meeting of all senior executives of the company's marketing department.

After that, there was a two-hour internal meeting.

Based on everyone's opinions, and in order to avoid repeating the mistake of the 'Swiss franc black swan' at the time, Isaac proposed to the group to reduce the leverage multiples for opening positions in the pound exchange rate market and to increase margin requirements.

After that...

On Friday, June 6, the pound sterling exchange rate further fluctuated higher and broke through the 10 mark.

FXCM International has sent an important email to all customers regarding reducing the leverage ratio of the British pound exchange rate and increasing the trading margin.

According to the content of the email.

FXCM International leverages the GBP exchange rate.

It has been adjusted from the general 100 times to the maximum 20 times, and the forced liquidation line and the minimum stop loss line have been raised.

After FXCM International imposed trading restrictions on the British pound exchange rate market, major market makers around the world soon realized that an unprecedentedly fierce battle between bulls and bears was about to take place in the British pound exchange rate market, and it was very likely that extreme volatility like the previous "Swiss franc black swan" would occur.

So, overnight.

All market makers and investment banking trading firms around the world.

All transactions in the British pound exchange rate market have been subject to leverage restrictions for opening positions, and the margin ratio and forced liquidation line standards for investors in trading this underlying product have also been increased.

(End of this chapter)