Rebirth of the Capital Legend

Chapter 285: The secret change in the expected direction of bulls and bears!
Afterwards, when the time turned to the Asian trading session on June 6, the pound exchange rate rebounded again and gradually recovered its lost ground.

"The pound exchange rate is trending, and the intraday volatility is getting bigger and bigger!"

On June 6, at 22:9 a.m. Yanjing time during the Asian session, in Hong Kong, Huayi Capital Hong Kong Branch, Huayi Chengyuan No. 1 Main Hedge Fund Trading Room, fund trading manager Qu Zecai said: "The long and short open positions in the market have all exceeded 450 million lots."

"Tomorrow is the time for the national referendum." Su Yi responded, "The closer the referendum is, the greater the market volatility will be."

"It's not just the market fluctuations that will become more and more intense." Kong Fansheng, the investment director of Huayin International, which operates in conjunction with Huayi Capital, also said at this time, "The market news, sentiment, and expected changes are also in a situation of drastic changes."

"Generally speaking, the news is still more bullish," said Meng Shengfei from Huayin International's Investment Department 2. "However, the number of major capital institutions that have turned from long to short seems to be increasing. Following Goldman Sachs's turn from long to short, Barclays Investment Bank's turn from long to short last night also had a great impact on the market."

"The change from long to short for 'Barclays Investment Bank' is somewhat unexpected!" Frederick, from the main hedge fund product trading room of 'Aberdeen Asset Evolution No. 1', responded through the instant communication at this time, "This shows that many capital institutions in the UK are also bearish and short-selling.

And 'Barclays Investment Bank' turned from bullish to bearish.

It will have a certain strategic impact on the entire European capital and British domestic capital institutional groups that are long, and will also cause many speculative and long retail investors in the market to make corresponding strategic changes.

This shows that the net long position in the market has been decreasing since the second half of yesterday's trading session.

It can be seen from the fact that many intraday long positions in the market have been continuously closed and covered. "

"The number of net long positions is now back to less than 70 lots," said Meng Shengfei. "I was originally worried that the market news would continue to shift in the bullish direction, which would directly lead to a rapid imbalance in the long and short forces in the market. Now it seems... I seem to be worrying too much."

Su Yi smiled and said, "The original trend of the pound exchange rate was in a long-term downward channel. The short-selling force in the market has always been strong. It was only when the British cabinet suddenly passed the 'Brexit referendum' bill that caused a short-term change in market expectations."

"Isn't it you, Mr. Su, who started this battle between bulls and bears?" Meng Shengfei said with a smile.

Su Yi responded: "I just went with the flow."

"But I heard that the Bank of England has increased its intervention in the pound exchange market." Kong Fansheng pondered for a moment and said, "I also heard that many core financial institutions in the UK have been called by the central bank to continue to invest funds to intervene in the market exchange rate of the pound."

"This is not just hearsay, it's a fact," Frederick responded. "The latest market news is that the Bank of England and related financial institutions added at least 40 long positions in the pound exchange rate market yesterday. However... judging from the market trend, this huge long intervention force has not been able to stop the pound exchange rate from falling back, nor has it been able to save the market from its decline."

"So, the market rumor about the plan to 'target Wall Street short-selling capital' is true?" Meng Shengfei said in surprise.

Frederick responded: "You could say that."

"Then if the Bank of England and its affiliated institutions intervene personally, will the British government directly control the referendum result tomorrow?" Meng Shengfei heard Frederick confirm the authenticity of the plan to 'sniper Wall Street short-selling capital'. For a moment, he said with some conspiracy theories, "If the direct intervention of the central bank can lead to the government manipulating the referendum voting results... then it is equivalent to gambling with a group of guys who already have the winning cards on the current pound exchange rate. It's hard to say what our chances of winning are."

To be honest, when he decided to intervene in the battle between bulls and bears in the pound exchange rate market.

He had not imagined that the subsequent trend development and the number of long and short positions would be so intense.

The number of long and short positions reached 450 million, which was the first time in his personal investment career.

What's more...the direct involvement and intervention of the Bank of England also caused him, as the manager of short-selling institutional investment, a lot of worries.

After all, for a country's currency exchange rate.

As a central bank that issues currency, as long as foreign exchange reserves are relatively sufficient and as long as it is determined to maintain exchange rate stability and intervene in the market, it can still play a decisive role in changes in exchange rate trends.

Since the plan of "sniping Wall Street short-selling capital" is likely to be true.

Moreover, the Bank of England and its affiliated financial institutions are indeed making large-scale long positions on the pound exchange rate to resist short-selling capital on Wall Street and even the short-selling behavior of major short-selling institutions such as Huayin International, Huayi Capital, Aberdeen Asset Management, etc. He feels that his worries are entirely possible.

Su Yi heard Meng Shengfei's concerns and responded calmly: "As the issuer of the pound, the Bank of England certainly wants to maintain the trend of the pound exchange rate and keep the pound exchange rate stable, but as of now, the Bank of England does not have enough US dollar foreign exchange reserves to sell.

When it is impossible to sell large amounts of US dollar foreign exchange, recover the British pound currency circulating in the market and conduct actual market operations.

Simply due to the suppression of long positions in the foreign exchange trading market and the spontaneous long-term behavior of related financial institutions.

It is impossible to curb the trend of the pound sterling exchange rate.

There is a huge uncertainty ahead: tomorrow's 'Brexit referendum'.

For the offline trading market, many international trading companies, currency exchange companies, and international currency trading companies, no matter what the final referendum result is, no matter the trend of the pound sterling exchange rate, in which direction the extreme market changes will occur tomorrow, in order to avoid the risk of uncertainty.

They will give priority to selling the British pound and convert it into the US dollar, which has a relatively stable exchange rate and stronger liquidity.

and so……

Although the current news is biased towards the bullish direction.

However, in the actual offline trading market, a trade market where currency circulates freely, the exchange rate of the pound has been falling steadily, and the amount of pounds circulating in the market is also increasing rapidly.

If it weren't for the Bank of England's continued intervention in the pound sterling exchange rate.

If it weren't for the referendum result tomorrow, the preliminary vote count would be to continue to remain in the EU.

The actual pound exchange rate at this time should have fallen below the low point of 1.4600 a month ago when the referendum bill was passed by the cabinet. "

"Mr. Su is right." Frederick continued with a smile, "According to our agency's intelligence, major international currency trading institutions have begun to impose corresponding restrictions on the exchange of pounds for dollars. Even though corresponding restrictions have been made, the number of customers who exchange their pounds for dollars is still increasing rapidly.

Moreover, there will be even more investors selling pounds in the offline black market.

In summary, the Bank of England's intervention in the pound sterling exchange rate has not curbed the selling spree of the pound in the offline trading market.

Just as Mr. Su said...

There is a corresponding exchange rate difference between the current offline black market and the online trading market, and the exchange rate trend of the pound sterling.

If the Bank of England wants to truly curb the situation where everyone is rushing to sell the pound in order to avoid the uncertainty risks of tomorrow's referendum.

I estimate that at least tens of billions of dollars of foreign exchange reserves will have to be sold.

But we all know that the Bank of England will not sell such a large amount of US dollar foreign exchange reserves at this time to stabilize the pound exchange rate.

Because the biggest risk affecting the pound exchange rate has not yet arrived.

They must keep enough foreign exchange reserves to cope with extreme market trends tomorrow."

"No wonder more and more Wall Street capital institutions and other major investment banks around the world are turning from long to short." Kong Fansheng just came to his senses at this time, "But the hidden dangers that Manager Meng just mentioned still exist. If government agencies, under the market pressure of the collapse of the pound exchange rate, manipulate the referendum results in order to maintain the exchange rate, and join forces with the Bank of England to implement a plan to 'sniper short capital', it is entirely possible to use the market sentiment guided by the referendum results and the capital advantage to drive up the pound exchange rate and defeat the main short-selling forces in the market in one fell swoop!"

"With the development of the British referendum, is there still room for government agencies to manipulate it?" Su Yi smiled and replied, "If the British government, that is, the two houses and the cabinet are all united, then what you two, Manager Kong and Manager Meng, are worried about, may really happen.

However, if they are truly united and unanimous in their opinions.

A month ago, the proposal for a 'referendum on Brexit' would not have been put forward and passed.

This proposal can be put forward and passed.

This shows that there are huge differences within the British government on whether to leave the EU or not.

Now that the bill has been passed and the referendum process has been initiated, the development of the matter is no longer something that the government agencies themselves can control.

This is a situation that has attracted worldwide attention and has attracted the participation and attention of countless capital institutions.

Neither the local municipal governments nor the British Cabinet have any way to deal with this, nor do they dare to manipulate the voting results or conduct fake voting.

Because if the fraud is discovered.

This will lead to greater domestic conflicts in the UK and cause more and more serious problems.

And if the voting results are manipulated, the people will be dissatisfied, and many cabinet members who want to leave the EU will be dissatisfied, then there will definitely be another referendum.

So doing this is completely meaningless.

Another thing is that once fraud is committed, it will create an opportunity for one's political competitors to strike a fatal blow, thus ruining one's own political future.

For many in the British Cabinet, this is simply not worth it.

For them, political future is far more important than the determination to maintain the exchange rate.

Moreover, the market-based exchange rate can rise again after falling, but once their political future is ruined, there will be no future for them.”

"So... conspiracy theories don't exist?" Meng Shengfei asked.

Su Yi responded firmly: "At least in the face of a fundamental event that has attracted global attention and has the participation of countless global capital institutions, and concerns the fate and future of the country, the conspiracy theory you mentioned does not exist."

"Then I'm relieved." Meng Shengfei breathed a sigh of relief and said with a smile, "Depending solely on market forces and the combined efforts of countless funds inside and outside the market, with the Bank of England restraining its hands, I believe that the trend of the pound exchange rate will definitely not be able to continue to break upward."

"Now, the main long institutions in the market seem to still have the upper hand, but in fact, they are only a moment away from losing confidence." Su Yi said, "It's just that after more than a month of long-short game, the long positions in the market have accumulated too much. Even if some of the main long institutions have realized the risk of holding positions, it is difficult for them to withdraw."

"That's true." Kong Fansheng nodded slightly. "If there is an accumulation of too many long positions, once a long institution with a very large position covers its position in a concentrated manner, it will soon cause a chain reaction in the market, causing the collapse of the 'domino effect' in the long direction."

"So... they can only pin their hopes on the Bank of England." Frederick said with a smile, "but this is like a lifeline, it can't help them at all."

"All the short-selling institutions in the market should be looking forward to the moment when a long-selling institution loses confidence and starts to cover their positions," Meng Shengfei said. "Once this opportunity comes, all the short-selling institutions will definitely do their best to concentrate their funds to sell at a loss."

"This is actually the same for us as well." Su Yi said, "With too many long and short positions piled up, both the long and short sides in the market can only hold on. No one can leave the market safely unless they defeat the other side."

"But victory will eventually belong to us." Frederick said confidently.

In his opinion, the trend of the pound sterling exchange rate is now very clear. Even if the result of tomorrow's referendum is different from expectations, he believes that they can still achieve the final victory and seize huge profits from this round of extreme pound sterling market outbreak.

As several people analyzed and discussed...

In the pound exchange rate market, after a brief rebound, the pound exchange rate began to fall again. The strength of its rebound seemed weaker than yesterday, and the speed of new short positions on the market began to exceed the long positions, causing the net long position in the market to continue to decline sharply.

(End of this chapter)