Chapter 65: 65. Asian Financial Crisis
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From the end of February to the beginning of March 1997, a lot of hot money appeared in the international financial market and purchased a large amount of Thai baht, and the Thai baht continued to rise.
On March 3, the financial report of the Bank of Thailand showed that nine financial companies and one housing loan company in Thailand had problems with poor asset quality and insufficient liquidity. In addition to the ten companies that were specifically named, some other companies also had poor financial conditions.
With Thailand's economy booming and the baht continuing to appreciate, bubbles are already looming.
On March 3, almost at the same time as the Thai central bank's financial report was released.
In early March, international speculators led by George Soros' Quantum Fund and Julian Robertson's Tiger Fund began to sell off Thai baht, as well as stocks of Thai banks and financial companies, and the baht began to fall.
From mid-to-late March to April, the decline of the Thai baht triggered international panic. Not only were other international investors in the Thai stock market selling Thai baht, but even Thai banks and companies themselves were selling their Thai baht and stocks as quickly as possible in order to stop losses.
In early May, the Thai baht fell to a new low of 27 baht to the US dollar and continued to depreciate. In mid-May, Rowan entered as well and bought a large amount of Thai baht when it fell to its lowest value.
In mid-to-late May, the Central Bank of Thailand and Singapore mobilized tens of billions of dollars to absorb the Thai baht in an attempt to save the stock market. The Thai baht did rebound in the short term, but international speculators were caught off guard and lost at least tens of billions of dollars in this surprise attack by the Thai government. A considerable portion of this money went into Rowan's pocket.
In June, Quantum Tiger Fund's attack on the Thai stock market has attracted worldwide attention. The hot money behind Quantum Fund and Tiger Fund has risen from tens of billions of dollars to hundreds of billions of dollars. Through leveraged financing, these hot money may generate trillions of dollars or even infinite effects in the international financial market at any time. However, the Thai government's foreign exchange reserves are only 30 billion US dollars.
Before the formal battle between the two sides, Rowan had quietly left the Asian financial market with his profits. Just as he came quietly, he left quietly without leaving a trace.
No, perhaps it is not that there is no trace left. George Soros and Julian Robertson must have known that there was such an unknown fund. After they finished the preliminary paving, they followed closely behind them, sometimes even got ahead of them, made a fortune in the currency war, and then colluded with the Thai government to counter-attack them before leaving. But who does this unknown fund belong to? Why did they grasp the opportunity so accurately? Quantum Fund and Tiger Fund will never know the truth.
"The Thai baht is finished," the fund manager said with certainty. "The hot money now gathering in the Thai stock market is immeasurable, and the Thai government's foreign exchange reserves are less than 50 billion US dollars. Moreover, because of a small loss before, Quantum Fund's counterattack this time is bound to be more fierce. This country can't hold out for too long under the serial bombardment of international speculators."
The Thai baht is bound to fail. In addition to the lack of strength of the Thai government itself, another very important reason is that even Thai banks and companies are no longer on the side of the government at this moment. In order to stop losses, they are also constantly selling Thai baht and stocks in their hands, causing a larger chain collapse of the Thai baht.
"Why don't we stay in the Thai stock market for a while longer and join the final battle?" the fund manager hired by Elizabeth asked puzzledly. "The final battle between international speculators and the Thai government may push the Thai baht exchange rate to 30:1. If we continue to hold the options for a few more days, we will definitely make money."
The tone of the fund managers sounded more like questions rather than doubts, because even if they had doubts about Rowan before, those doubts had long since disappeared without a trace with the successive victories in the past few months. In fact, these fund managers and traders now not only firmly believe that Rowan is a talented financial expert, but also firmly believe that there must be an even more mysterious figure standing behind him.
If the fund managers and other traders initially obeyed Rowan's orders only because of Elizabeth's orders, they have now become willing to follow the instructions. It is because in just two weeks, the funds they have taken away from the Thai stock market and from other international speculators are 5 times to what they invested. It is not that these people have never had such a large amount of money, but they have never dared to believe that they are the creators of such a huge amount of funds - even if they are only given a dividend of a few tenths of a percent, or even less, it is enough for these people to live a life of luxury - this not only makes them feel like they are dreaming, but also makes them regard Rowan as a mysterious and omnipotent magician.
"Because I know when to quit and I don't like to force others into a desperate situation." Rowan said through the phone as he couldn't be there due to his busy schedule, "Besides, we have such a huge amount of funds in our hands. Such a large-scale capital flow cannot be hidden from the experts of Quantum Fund and Tiger Fund. We can retreat unscathed while they are busy now, but it will not be easy for us to leave so easily after they win a decisive victory in the battle with the Thai government. God bless me, I am still planning to fish in troubled waters in their next few battles. It would be too embarrassing if I was found out now."
"The next few battles? Mr. Stark, you don't think the same as me, do you? After Thailand, Quantum Fund also has targets in the Philippines and Malaysia—"
"Malaysia, Indonesia and the rest of the unfortunate bunch."
Elizabeth swallowed and said in a very loud voice: "Then are we playing the same role as in the Thai baht war? Hiding behind the scenes and fishing in troubled waters?"
"Fishing in troubled waters, I like this phrase." Rowan said with a smile, "But we can't always follow Quantum Fund. We can continue to play the previous role in the next few currency wars, but when Quantum Fund encounters a tough bone to chew, we must stop at the right time, or even stand on the opposite side of it."
"The tough nuts to crack... are you referring to Hong Kong, South Korea or Taiwan? These are the only three markets in Asia that can compete with the international speculators led by the Quantum Fund. The Philippines, Myanmar, Indonesia and Malaysia not only have similar economic problems as Thailand, but also have low foreign exchange reserves. It is impossible for them to withstand the joint attack of international speculators."
Rowan replied vaguely, "You guessed right. Hong Kong, for example, has a foreign exchange reserve of 94 billion US dollars. It will definitely last longer than the Thai baht. Maybe it can even, uh, turn the tables."
Elizabeth keenly caught what Rowan had not finished saying, but she was still a little puzzled: "Hong Kong's foreign exchange reserves and economic health are stronger than Thailand and the Philippines, but it has the most famous hedge fund team in the world? This is difficult, right?"
"There are winners and losers in the financial market. No one can be an invincible general." Rowan avoided the main point.
Elizabeth wanted to ask in return, "Then why are you so sure that the copycats who have enormous amounts of hot money will lose?"
"Well just think of it as me calculating it, it will be hard for me to make you understand."
Around the beginning of July 1997, under the sniping of international speculators led by Quantum Fund and Tiger Fund, Thailand will be forced to announce the decoupling of the Thai baht from the US dollar and implement a floating exchange rate system (like the British pound in 1992). Then the Thai baht will fall to the bottom, and the highest exchange rate will be conservatively estimated to be 30:1.
From July to October 1997, countries such as the Philippines, Indonesia, and Malaysia, which had similar economic conditions and systems to Thailand, were successively hit hard by the depreciation of the Thai baht. Then, under the attack of international speculators, the Philippine peso, Malaysian ringgit, and Indonesian rupiah depreciated one after another.
In October 1997, the exchange rate of the Taiwan dollar was hit, and stock markets in Taiwan, Japan, South Korea, Singapore, Malaysia, Thailand and other places fell again. This financial storm, which was initially caused by the depreciation of the Thai baht, eventually swept across Asia.
Then at the end of 1997 and the beginning of 1998, international speculators had conquered almost all of Asia. When they arrived at the last unconquered area, Hong Kong, they suffered a severe setback due to their miscalculation of the Hong Kong government's strength, thus ending the bloody storm in the Asian financial market.
——These are things that will happen in the future. Now, although many astute financial professionals have sensed the unusual wind direction and know that Thailand alone cannot satisfy the appetite of international speculators such as Quantum Fund, and that after the Thai baht, these bloodthirsty sharks will certainly turn their attention to other Southeast Asian countries, they will not yet imagine that the storm in the Asian financial world in the next year will be so huge and the impact will be so far-reaching.
Rowan knew it, so he made just the right preparations at the right time, and then earned a sum of money that most people in the world could never earn in their entire lives, no, it was even unimaginable.
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