What's wrong with me being a rich man?

Chapter 688 Undercurrents (4k)

The impact of Brexit, this black swan event, is comprehensive.

The pound fell, the euro fell, Hong Kong stocks fell, A-shares fell, and stock markets in the UK, Europe, and the US all declined.

The official announcement from Manchester occurred during the trading day in China. The Hang Seng Index fell below 20000 points, and HSBC Holdings plunged 11% intraday, marking its biggest drop in seven years. European stock markets opened at 3 pm China time and immediately crashed. The UK FTSE 100 plunged 9% in early trading, the French CAC40 fell 11%, the German DAX fell 9.7%, and the European bank stock index plunged 15% in a single day. Among them, Barclays and Lloyds Banking Group saw intraday declines of over 29%.

This can be described as an epic one-sided market trend.

Meanwhile, spot gold rose by a maximum of 8.2%, spot silver by a maximum of 6%, and gold futures by a maximum of 7.9%, all reaching multi-year highs.

Yu Xing, who was in Lingang, observed the changes in the global market and was also somewhat forced to start operating on Douyin.

His first post was to refute the baseless rumors of manipulation, while his second post returned to the core of the automotive business, discussing the impact of Brexit on the automotive industry.

"With the pound falling so much, and the UK relying on imports for 7% of its car parts from the EU, costs have increased by at least 1%. I feel that Jaguar Land Rover will have a tough time in the second half of the year."

"The UK's exports of complete vehicles to the EU will definitely suffer a significant decline; the impact of Brexit is indeed enormous."

With Brexit, the UK will no longer enjoy zero-tariff treatment for automobile trade, and the UK's production volume this year will be at least 170 million vehicles. It will inevitably face a huge decline, and the original cross-border supply chain will be profoundly affected by customs inspections, border delays and tariff costs.

Yu Xing is quite interested in this. The Silicon Carbon Group is currently expanding its recruitment of talent in materials, chemistry, and batteries in China due to discussions and adjustments to its technology roadmap. While European car brands are transforming slowly, they are clearly not lacking in talent.

In accordance with his will as the leader, the Silicon Carbon Group is already planning to establish an overseas research center.

Yu Xing's Douyin videos are a kind of casual chat, but many comments are eager to get started, indicating that they understand what the "King of Short Sellers" means.

"Understood! The king of short sellers hasn't forgotten his original intention. I'm going to short BBA right now!"

"Car manufacturers have been greatly affected, but Mr. Yu said that electric vehicles are the future."

"President Yu specifically mentioned Jaguar Land Rover. I understand. We'll go after Tata Group right away."

The acquisition of Jaguar Land Rover from Ford by India's Tata Group in 2008 for $23 billion has been a source of pride for Indian manufacturing, with Jaguar Land Rover actually contributing 9% of Tata's profits.

Jaguar Land Rover could face a loss of at least £5 million in profits this year due to the sharp drop in the pound alone.

Yu Xing resisted the urge to like the post about "shorting Tata," but Liu Wanying did like it using her own account.

She browsed the comments section of the short seller's TikTok post, pointed to the comments involving Tata, and said, "Tata's logic is obvious, we'll just have to see how it falls."

Before the news of her passing through the mountains was even released, Liu Wanying had already been studying the Indian stock market, and the Tata Group, which had been plagued by negative news for years, was one of her targets.

However, India has its own unique circumstances, and various reports do not harm the Tata Group's fundamentals.

Today, the black swan event that Jaguar Land Rover has encountered will inevitably severely damage Tata's future.

Yu Xing strongly agrees with Tsai Ing-wen's actions this time. Tata Motors' Achilles' heel lies in Jaguar Land Rover, and Jaguar Land Rover's Achilles' heel lies in the UK. The depreciation of the pound, the 10% tariff on automobiles, and the potential cost increase and supply chain disruption risk brought about by Brexit are almost predictable; a simple math problem is all it takes.

Unless Britain remains in the EU, or Jaguar Land Rover suddenly embarks on a rapid electrification transformation.

“Let’s include it in the target list. There’s no rush. The cost of components takes time to be passed on. Right now, we only have the vote count in hand. There will definitely be continuous negotiations and procedural stalemates later on,” Yu Xing reminded. “Moreover, the pound is depreciating now, which may stimulate its exports.”

Brexit will likely be a stalemate for some time, and the costs of the supply chain will also need to be passed on, so now is not the best time to short Tata.

As Yu Xing and Liu Wanying chatted, they looked at Douyin (TikTok) again after a while and suddenly saw the dissuasion under the "Short-selling Tower" comment.

"Brother, enough with the talk. Don't short it now. The depreciation of the pound is good for exports, and the domestic market may also see growth. It's not a good opportunity in the short term."

Yu Xing and Liu Wanying exchanged a glance, their expressions both somewhat strange.

The comment that appeared in the comment section was none other than Li Song.

Li Song had previously posted a summary of Guoshanfeng on Douyin, and his account was verified with his real name. Although the public was unaware of his position at Guoshanfeng Foundation, he was still considered a public figure.

Yu Xing did not reply, but called Li Song directly.

Li Song finally got a call from President Yu after taking the initiative, and he was completely numb.

I thought Mr. Yu would contact me immediately, but I didn't expect him to be posting on Douyin (TikTok) instead.

Yu Xing asked directly over the phone, "Mr. Li, what are you doing with nothing to do?"

“Uh, Mr. Yu, everything is proceeding normally with the fund. We will lock up most of the funds today. I, I…” Li Song’s tone became somewhat resentful, “I’m waiting for you to contact me.”

Yu Xing said "Oh," and then added, "I thought you were busy, so I didn't plan to bother you."

Li Song's mood turned from gloom to joy as he reported, "We've closed out 70% of our pound options and VIX futures. The sentiment will definitely recover over the weekend. Once there's a rebound window on Monday, we'll close out the remaining short positions in futures and stocks."

"Safe-haven assets like gold and German government bonds will be liquidated between next Wednesday and Friday."

The first 24 hours after Brexit were the most volatile for the market, and there will inevitably be fluctuations afterward. Whether it's Peak Capital or other global institutions, their operations will likely be similar, choosing to quickly secure most of their profits.

Meanwhile, governments in different regions will not remain indifferent to fluctuations in the financial markets, and central banks around the world will intervene to varying degrees. Peak-crossing funds' rapid liquidation is also aimed at avoiding policy risks.

Hearing the joy in Li Song's voice on the phone, Yu Xing was about to speak when he saw the message Zhang Yangxu handed him. So he said, "Well, I believe in your professionalism, but you still have to go to Hong Kong again. The Peak Foundation needs to be investigated."

I'm going to be investigated again.

Following extensive media coverage in Hong Kong regarding Peak Capital's moves in the Brexit process, the Hong Kong Securities and Futures Commission (SFC) has swiftly launched an investigation to determine whether Peak Capital obtained internal vote-counting data in advance and whether it was involved in insider trading.

Furthermore, is there any market manipulation involved in the peak trading activity, such as using large orders to guide the price of the pound and amplify market volatility before the referendum?

Yu Xing felt that this was probably just a formality, and he felt quite at ease.

The funds of the Over Peak Fund are fully compliant, and the operation was normal. As for the negative public opinion that may cause turmoil in the fund, other funds may be more worried when they encounter it, but the investigation and lawsuits involving the King of Short Sellers have continued from last year to this year, so a little negative publicity is probably nothing to worry about.

Upon hearing this, Li Song's heart clenched. On the one hand, he immediately said that he would fly to Hong Kong as soon as possible, but on the other hand, he was somewhat hesitant and wanted to hear President Yu give him some details.

Yu Xing sensed the change in emotion on the other end of the phone and reassured him, "Don't worry, they won't find anything."

Li Song licked his lips, unsure how to interpret the sentence.

He put down his phone and immediately called his wife, who had already gone to work, to ask for her opinion.

"It's definitely nothing, it's just too flashy." Xu Xin said calmly on the phone, but then added, "However, it will be flashy no matter what. The size of the Over Peak Fund will definitely grow rapidly this year. Mr. Li, congratulations, you may be in charge of one of the top three hedge funds in Hong Kong."

The largest hedge fund in Hong Kong is Value Partners, with assets under management of around US$130 billion. The second largest is Greenwoods Asset Management, with assets under management of around US$60 billion.

Peak Capital, backed by the short-selling king, had already secured enough funds to break into the top ten in Hong Kong. More funds were expected to follow. Considering the rapid growth of Paulson's fund during the financial crisis, known as "the first hedge fund manager" in the US, this Brexit bet would inevitably attract even more funds more quickly.

Xu Xin suspected that Peak Capital might surpass Greenwoods Asset Management in its first year of operation, but it would likely still lag behind Value Partners Group. This would inevitably make it a key target of the Hong Kong Securities and Futures Commission, and related developments could have a certain impact on the liquidity of the Hong Kong stock market and the Hong Kong dollar foreign exchange market. Peak Capital is a heavyweight player in the local financial market.

Given such a scale of funding and growth rate, if she were standing in front of Li Song, it would be hard for her not to be sarcastic. Looking back a year, he was just a nobody with no achievements, yet now he's in this position.

Li Song still trusted his wife's judgment. One second he was worried, the next he was happy: "Then I'll be a guest of honor when I go to Hong Kong this time. I need to think carefully about whether to invest that money in Value Partners or with us."

Value Partners is backed by the Cheah Cheng Hye family and the Yap Mou Tsun family. The former is the core operator and absolute controller, while the latter is the co-founder. Meanwhile, well-known tycoons such as the Lee Shau Kee family, the Cheng Yu Tung family, and the Robert Kuok family of Malaysia are core LP institutions.

“Li Song, I think you should calm down before going,” Xu Xin reminded him seriously. “The fund isn’t yours. You can say whatever you want, but don’t actually take credit for it. And don’t be arrogant when you get to Hong Kong. To be honest, in your position…”

She pondered for a moment and said, "We should think more about President Yu's considerations and stance. We should see if the funds we've raised can be exchanged for resources. Moreover, black swan events are unlikely to happen again. We shouldn't lose sight of our funding strategy. The expansion speed of the Peak Fund is just too fast."

Listening to his wife's earnest advice, Li Song said seriously, "Don't worry, although I am a thoroughbred, I can never forget that President Yu is my mentor. Thoroughbreds are common, but mentors are rare."

Xu Xin was speechless, unsure whether Li Song had listened or not. She could only marvel at President Yu's ability to turn lead into gold, even turning a donkey into a thoroughbred.

She is simply astonished by the changes in the fund, and the risk of the investment strategy is still too high.

Xu Xin was in the office, and although she had work to do, she couldn't help but pay attention to market trends. She scoffed at the speculation that President Yu was manipulating Brexit, but she had to admit that this overly risky bet would inevitably become famous worldwide.

Alongside Peak Fund are globally renowned institutions, and their operations may well be included in textbooks when discussing the impact of Brexit.

While scrolling through the news, Xu Xin suddenly came across a list of institutions that made money from Brexit. In addition to the ones she already knew, there was also an institution from South Korea.

Intrigued, she searched for information on domestic platforms using keywords, but found little. She then searched abroad and discovered that a South Korean token called "Future Coin" had similar promotions before the referendum.

Several months ago, this institution released a white paper highlighting its value, arguing that globalization is loosening, the cracks in the EU system are being completely ignored by the market, the credit risks of the pound and the euro are imminent, and FutureCoin is the only digital safe-haven asset for ordinary South Korean investors to hedge against the turmoil in the global fiat currency system.

Compared to Bitcoin, it has a lower barrier to entry, faster liquidity, and a Korean won trading channel that is more suitable for Korean users.

Back in April, this institution published several macroeconomic analysis articles arguing that the market was underestimating the true probability of Brexit. However, its views were ridiculed in South Korea and sparked debates with local analysts and financial bloggers. Brexit remains a niche view, not only then but even yesterday.

This month, as the UK referendum finally arrived, this token on the South Korean exchange Bithumb saw its value increase nearly sevenfold in a single day.

Today, it earned the title of "local god coin" in South Korea and continues to rise.

Looking at the extremely rapid increase in the price chart, Xu Xin felt that the world was becoming increasingly strange.

She glanced at the related information for a while, then closed the browser, muttering, "What kind of monsters and demons are these..."

Xu Xin blanked her mind for a while, then suddenly remembered the interview that President Yu gave at the Silicon Carbon Technology Day. At that time, he said to the media, "Times have changed."

Back then, when I saw the news, I thought Mr. Yu was talking about cars. Now, after seeing the actions of Mountain Peak Fund, it seems like he's hinting at something else.

Times seem to have really changed; even Britain can leave the EU... but there shouldn't be any more severe shocks, right?

Xu Xin shook her head, pushed the document in her hand aside, and looked at the latest news on Bloomberg. She noticed that among the many news reports about financial market turmoil, there was a report about the US election.

She casually clicked on it and took a look, and the shock of how times had changed intensified even further; America might be about to welcome its first female boss.

(End of this chapter)