Rebirth of the Capital Legend

Chapter 262: False news lures more people!
However, even though all market makers and bank trading institutions have restricted the leverage multiples and margin ratios for opening long and short standard contracts in the pound exchange rate market, this has not prevented many short and long institutions from continuing to pour into the pound exchange rate market, nor has it prevented the influx of more and more market speculative retail investors and hot money.

When the leverage ratio for opening positions in the British pound exchange rate market is restricted.

As market trading hours continue to progress, long and short positions in the market continue to show an increasing trend, and the net long position still maintains a dominant position.

"Boss Su, our current short position has reached 12 lots." On Monday, June 6, inside the 'Hua Yi Capital' company, in the 'Hua Yi Cheng Yuan No. 13' hedge fund trading room, Qu Zecai, the trading team manager, stared at the fund position details on the main control computer and reported to Su Yi, "Our positions have a total loss of $1 million, with a total investment of $3.1 million. There is still $4.5 million in available funds in the current fund account, and the risk is still within controllable range."

"Okay." Su Yi nodded slightly, "Continue to increase your position and short."

"However, Mr. Su..." After hearing Su Yi's instructions, Qu Zecai paused and said, "After the major market makers set leverage restrictions on opening positions for pound exchange rate transactions, if we want to add new short positions, we will have to invest much more funds than before, which will increase the risk of our new positions."

According to the previous opening standards of exchanges, a number of bank trading institutions and market makers.

Previously, they only needed about 1000 US dollars to open a standard short contract on the British pound exchange rate, but now, it requires at least 5000 US dollars.

The margin standard has been increased fivefold.

This means that they have to continue opening short positions as originally planned, and the funds invested will increase five times compared to before. This is a huge pressure given their current insufficient capital reserves.

"It doesn't matter." Su Yi said, "We still have $5.5 million in reserves, which is enough."

With their current short position size, their cash reserves of USD 5.5 million are enough to hold them over until the pound sterling exchange rate breaks through the 1.6000 mark.

And Su Yi knew...

Based on the historical memories in his mind.

In this Brexit event, the highest point of the pound exchange rate did not even break through the 1.6000 mark, let alone the 1.5000 mark.

The entire plan to short the pound exchange rate.

He has left himself enough safety margin.

What's more, under his influence, the main short-selling institutions in the market are no longer dominated by him alone. Global asset management institutions such as Aberdeen Asset Management, BNY Mellon, and Citigroup Investment Bank have already entered the market and established a number of short positions, especially Aberdeen Asset Management's Evolution No. 1 hedge fund.

According to the information Su Yi learned.

Frederick has established more than 15 new short contracts.

"Before June 6, gradually increase our institution's short position to 23 lots." Su Yi's eyes flashed, "In the next few trading days, as long as the pound exchange rate continues to rise, you can continue to short sell at highs. As for the cost of opening a position, you don't have to worry about it."

"Played to 17 hands?" Qu Zecai was slightly stunned when he heard Su Yi's words.

This is 2 lots more than their previous plan, and these extra 2 lots require an additional $1000 million in margin.

Su Yi nodded slightly: "The major market makers have predicted the extreme volatility that is very likely to occur in the market in advance, reduced the leverage ratio for opening positions and increased the trading margin ratio, which basically prevented retail investors with smaller funds from entering the market, and also created financial pressure on the long institutions that continue to squeeze us out.

In addition, the net long position in the current market has reached nearly 80 lots.

Under a net long position of this size.

Many bulls who have made profits will definitely close their positions and cover their positions.

In other words, when the opening leverage ratio is reduced and the trading margin ratio is increased, the cost of long positions' continued short squeeze will increase exponentially, and the amount of funds invested will also increase exponentially.

On the contrary, as more and more long positions are closed and covered.

As the subsequent net long position returns to a relatively reasonable level.

In the market, the bullish force will continue to weaken, while the bearish force will continue to increase.

Since the market's bullish and bearish turning points are gradually approaching, there is no need for us to maintain the previous relatively conservative trading strategy. "

"Is the market's bullish or bearish turning point really approaching?" Qu Zecai asked uncertainly.

Recently, every time he walked into the trading room, all he saw was the new position losses of at least $1000 million on the main computer screen.

The losses continued to increase over the past few days, and the pound sterling exchange rate was almost showing a unilateral upward trend.

His confidence in his bearish view on the pound exchange rate has been reduced to very little.

If Su Yi had not been still full of confidence and determined to let them continue to short the pound exchange rate at every pound sterling rise and continue to invest funds in the pound exchange rate market.

With his cautious trading style.

He must have been unable to bear the psychological pressure at this stage and directly stopped loss and closed his position.

Even if he did not close his position to cover his losses, he would certainly not choose to do as Su Yi did and continue to short the pound exchange rate at every rally high, further expanding his short position.

After all, continue to increase short positions.

Once the pound exchange rate breaks further upward.

What awaits them will be further rapid expansion of their holdings losses.

This will quickly push them into a more dangerous long squeeze and make their positions even riskier than they are now.

"Mr. Su..."

Su Yi smiled, but before he could answer, Wang Huaijin hurriedly pushed open the door of the trading room and walked in.

Seeing his anxious expression, Su Yi couldn't help but look down at the time and found that it was already 4:47 and the market had entered the European trading session. He couldn't help but ask, "Is there any new market news from the UK across the ocean?"

Wang Huaijin nodded and responded, "According to the information I have heard, the Bank of England has decided to further sell US dollars and buy back pounds in the market to stabilize the pound exchange rate. At the same time, it will also conduct corresponding market operations to boost market confidence in the pound."

"It seems that this is to hedge against the extreme situations that may occur during the referendum on June 6." After listening to Wang Huaijin's words, Su Yi frowned slightly and said, "However, the fact that the Bank of England has so many funds fully demonstrates that there is a certain degree of unexpectedness in the result of the referendum, and this hidden worry is enough for the market."

"Mr. Su, I think..." Qu Zecai thought for a moment and said, "This is news that seems to be good for the pound exchange rate, but is actually bad for the pound exchange rate?"

Su Yi nodded and said, "That's true."

As he spoke, he immediately turned his gaze to the market of the British pound exchange rate.

During the brief exchange between the two, the market trend of the British pound exchange rate had quickly risen and fallen. In just 5 minutes, the amplitude reached a range of 30 points.

Wang Huaijin saw the calm expression on Su Yi's face, and also saw the rise and fall of the pound exchange rate. He finally relaxed from his nervous mood, breathed a sigh of relief, and said, "It's okay, it's okay... I thought we would suffer another big loss due to this news."

"The current losses are the source of future profits." Su Yi smiled and continued, "If you can't bear huge losses, you won't be able to reap huge profits. Don't worry, there are a lot of smart money and smart people in the market. Many people can see the calculations of the Bank of England. If they can see the calculations clearly and anticipate the benefits, they will not be able to influence the development of the market trend and its results."

"I don't understand trading." Wang Huaijin said with a smile, "But I believe in President Su."

"We all firmly believe in President Su," Qu Zecai echoed.

Su Yi nodded slightly and asked, "Are there rumors that our company is going to be liquidated? Are there rumors that I am going to be ruined?" Wang Huaijin hesitated for a moment and responded, "There are indeed a lot of rumors about our company and President Su recently, and some people's words are indeed unpleasant."

"It doesn't matter." Su Yi said, "The more rumors like this, the more beneficial it is to us. The more it will make the long institutions that are forcing shorts feel that we are about to go bankrupt, that we are only one step away from forcing us to liquidate our positions and cover our losses, that we are only one step away from destroying the shorts and forcing the main shorts in the market to stampede, then they will be more reluctant to leave the market, and the more they will fall into the trap of this battle between longs and shorts."

And just as Su Yi expected...

At the moment, the main fund product "Huayi Capital Chengyuan No. 1" under his management is still firmly increasing its short positions.

As his counterparty.

In the trading rooms of institutions such as Mitsui Yoshitomo Investment Co., Ltd., Tianhe Capital, and Huifeng Global No. 1 Hedge Fund, a group of fund managers and institutional traders who have received insider information are continuing to increase their long positions at high levels even as their floating profits continue to expand.

"Mr. Godfrey, the pound exchange rate has touched the 1.5420 mark today."

In the trading room of 'Huifeng Huanyu No. 1 Hedge Fund', Gerald, a core trader, said excitedly: "According to the current exchange rate of the British pound, the current position loss of 'Huayi Capital', the main short-selling institution, should have exceeded 3.5 million US dollars, right? If we calculate based on the maximum reserve fund of 6 million US dollars of this institution, it is estimated that the available funds are less than 1 million US dollars."

Godfrey nodded with a smile and said, "According to various summarized information in the market, Huayi Capital, the short-selling institution, should be unable to withstand the pressure."

"It seems that as long as the pound exchange rate breaks through the 1.5000 mark, this short-selling institution will definitely be liquidated." Gerald said, "And the liquidation of this major short-selling institution will inevitably trigger a chain reaction among a number of short-selling institutions in the market, causing short-selling to close their positions and more longs to take advantage of the opportunity to squeeze out the market."

"There is less than 100 points of room left." Godfrey said, "With the Bank of England continuously releasing positive news, it is estimated that this week we will see the pound exchange rate break through the 1.5000 mark, and we will also see Mr. Su of Huayi Capital being brutally slaughtered by the market."

"I'm really looking forward to it!" Gerald said, "I really want to see Mr. Su in person and see if he can still be as arrogant as he was at the party."

Just as Gerald was expecting the main fund "Hua Yi Cheng Yuan No. 1" headed by Su Yi to go bankrupt.

Looking forward to the fall of Su Yi, the rising financial star known as the 'China Stock God'.

A candid photo of Su Yi, looking haggard and wandering aimlessly in slippers at the side of his residence, The Peninsula Hotel, began to spread wildly on the Internet. At the same time, various rumors about the main hedge fund product "Huayi Capital Chengyuan No. 1" managed by him, which had a loss of nearly US$4 million, exhausted its reserve funds, and was on the verge of a margin call, also began to spread wildly in domestic, Hong Kong, and foreign financial circles.

And the spread of this kind of news...

It even caused a group of long capitals in the market that were hunting for the main fund "Huayi Capital Chengyuan No. 1" to further invest heavily in forcing the liquidation and continue to use huge amounts of funds to push up the market exchange rate of the pound.

At the same time, it also attracted enthusiastic inquiries from Su Yi's allies in the same camp and friends who cared about him.

"Mr. Su, the market rumors are probably not true, right?" Late at night on June 6, when the pound exchange rate continued to rise after the intraday correction and broke through the 13 mark, Mr. Frederick, the main hedge fund manager of Aberdeen Asset Evolution No. 1.5400, hurriedly called Su Yi, "If your institution is forced to liquidate, the pound exchange rate market may not be able to wait until the referendum day on June 1. Short-selling institutions including us will be slaughtered by a large number of bulls in the market."

Su Yi responded with a smile: "Of course it's not true. This is just the bait I released. Mr. Frederick, have you read the famous Chinese book on military strategy called "The Art of War"? Do you know the saying "playing hard to get"? No matter when, we must always give bulls hope, let them feel that they are just one step away from complete victory, and can completely defeat the bears and put them in a situation of trampling on each other."

"Playing hard to get?" Frederick pondered for a while and roughly understood what Su Yi meant. He said, "Mr. Su is really a master of trading. He uses himself as bait to lure the bulls to invest more huge amounts of money to force a short position, thus trapping them and making them unable to extricate themselves. This strategy is really powerful."

"At this moment, all the major long institutions have a lot of floating profits." Su Yi said, "Let these long institutions see that the biggest piece of profit pie is dangling right in front of them. As long as they work a little harder and continue to invest a little more money, they can swallow this huge pie. Then these guys will not easily take profits and leave the market. Only by dragging these huge longs until the referendum day on June 6 can we cause extreme fluctuations in the pound exchange rate and have huge profits to harvest."

Frederick smiled and said, "Mr. Su is still smart."

After hearing what Su Yi said, he became obviously more confident about the future.

Moreover, after thinking about it carefully for a while, he was shocked to find that it seemed that since the main fund "Hua Yi Chengyuan No. 1" headed by Su Yi intervened in the pound exchange rate market and started shorting the pound exchange rate, the entire bull trap had been set up, waiting for countless bull institutions around the world to fall in.

The more he thought about this speculation, the more frightened he became.

After Su Yi finished his phone call with Frederick, he was about to go to sleep, but unexpectedly, Fang Wanqing also called him.

"Are you... are you okay?" Fang Wanqing asked with concern on the phone. "I looked at the trend of the pound exchange rate. The bulls have formed an absolute crushing advantage. In addition, the fact that Mr. Frederick's main fund product 'Evolution No. 1' has been shorting the pound exchange rate and has been privately colluding with you has caused dissatisfaction among many senior executives of the Group's Asset Management Business Division. It is estimated that the subsequent restrictions will be on Mr. Frederick's 'Evolution No. 1' fund product opening short positions in the pound exchange rate.

Once the main fund "Evolution No. 1" headed by Mr. Frederick began to cover its positions to stop losses.

Su Yi...your situation will be even more dangerous.

Originally, the short-selling force in the current pound exchange rate market is very weak.

Once the short sellers trample on each other, your institution's positions are likely to face a margin call in an instant.

At that time, even if you want to stop loss and cut your position, you will have no chance.

I think... why don't you stop your loss? It doesn't matter how much money you lose. I believe that with your ability, you will be able to make it back quickly in the A-share market in the future.

If you stop loss and exit the market now, you may still have some capital left. Once your position is liquidated, you will lose everything.

Didn't the ancients often say, "As long as the green mountains remain, there is no need to worry about running out of firewood." It's not too late for you to stop loss and cover your position now. Don't push yourself too hard. "

Su Yi listened to her chattering a lot of words and felt somewhat moved.

After all, at this point in time.

If the other party didn't really care about him, he wouldn't call him.

"Your analysis is correct." Su Yi said, "But I still believe in my own judgment, and... don't believe the rumors. I asked President Wang to release them on purpose. I'm fine now, nothing's wrong, you don't have to worry."

"Was the news released intentionally?" Fang Wanqing was a little confused.

She didn't quite understand why Su Yi would release false news and lure the bullish forces in the market to further force a sell-off when he had already suffered huge losses.

Isn’t this just making yourself unhappy?
Moreover, the short-selling force in the market is already weak, and everyone is on edge and sees enemies everywhere.

Aren’t you afraid that you might accidentally cause the short-selling institutions in the market to trample on themselves?

"Miss Fang..." While Fang Wanqing was stunned, Su Yi paused and said, "Do you have any connections with some managers or leaders of state-owned asset management institutions?"

"What do you want to do?" Fang Wanqing asked.

Su Yi said: "I want to continue to teach the bulls in the market a lesson, and I also want to give myself an extra layer of insurance, and I also want to persuade state-owned asset management institutions to enter the market and short the pound exchange rate."

"You can't even protect yourself now, how can you convince others?" Fang Wanqing said.

"I have my own way." Su Yi said with a smile.

Fang Wanqing hesitated for a while and said, "I'm afraid it's hard to talk to leaders of domestic state-owned asset management institutions that participate in the international financial market and have investment decision-making power. But... I can ask my aunt. Ms. Li should know some people. If she is willing to introduce them to you, you might have a glimmer of hope."

"Thank you very much, Miss Fang." Su Yi said gratefully.

"It's not done yet." Fang Wanqing said, "Don't thank me yet. I'll call you back tomorrow."

After saying that, Fang Wanqing hung up the phone.

After the other party hung up the phone, Su Yi carefully pondered the follow-up plan for a while. The sharpness in his eyes became sharper and sharper. At the same time, he realized that the prelude to the long-short battle he had started was finally about to begin in full swing.

(End of this chapter)