Undoubtedly, the next day's headlines in the world's major financial media were the news of Mexico's sudden devaluation. For this late-night devaluation, even those who have been tracking Mexico for a long time did not expect that the Mexican government, which still has more than $20 billion in foreign exchange reserves, would suddenly announce a devaluation, even though the fundamentals of the Mexican economy were not good before.

Reuters reported that the Mexican government announced a depreciation of the peso, while the Mexican stock market was closed for a day, giving investors time to react. It is believed that this is the new government's haode policy before it is completed, and it is reported that before the handover of the old and new governments, the staff of the new government strongly recommended the depreciation of the peso.

According to the Wall Street Journal, the Mexican government rashly announced the depreciation of the peso when there are still more than $20 billion in foreign exchange reserves, which is likely to prevent the impact of international institutions, especially hedge funds, because the British government was also defeated by hedge funds when foreign exchange reserves were as high as $20 billion. This time, the Mexican government took the initiative to depreciate, on the one hand, in response to the onslaught of speculative funds, and on the other hand, to bring the peso back to normal levels, because the peso is indeed overvalued.

The New York Times advertised that the riots in Mexico's Chiapas province may be the main reason for the Mexican government's announcement of a devaluation.

Bloomberg, on the other hand, has claimed that the time has come to short the Mexican peso. They quoted unidentified people as saying that Wall Street is borrowing the Mexican peso on a massive scale, with Jihua selling off in large quantities over the next 24 hours, but that few banks in the market are willing to borrow the Mexican peso. Hedge funds are already planning to short the peso in the IMM market.

Bloomberg is a financial terminal widely used by financial institutions. They are far more connected to industry insiders than the news agencies, so when their news broke, almost everyone believed that the Wall Street hedge fund giants were targeting the Mexican peso.

Although the parties reacted differently to the depreciation of the Mexican peso, they all played a very key role in adding to the market's panic about the continued depreciation of the Mexican peso. Although the Mexican authorities have announced a devaluation, this behavior has not improved the market sentiment, but has only increased the panic, which policymakers may not have expected.

Capital is beginning to flee!

The first to flee was the stock market, and since investing in the Mexican stock market requires pesos, many U.S. investors are exchanging dollars for pesos. It is then put on the Mexican stock market. But now the peso has lost 15% of its value all at once. As a result, all their hard-earned gains in the stock market are put into the market, while those who do not earn 15% excess returns instead become loss-making, which is difficult for any investor to accept.

Although the depreciation of the peso is a positive for Mexico's exports, it has a positive effect on the Mexican stock market. But foreign investors have been denied the boost. All they want now is to get out of Mexico as quickly as possible by converting their money into dollars.

So when the banking system in Mexico opened on the 20th. Hundreds of foreign investors have asked to borrow pesos against their stock accounts and convert them into dollars.

And in the bond market. This is even more common, and despite the fact that some bonds are denominated in US dollars and interest payments are also made in US dollars, there is still a sell-off in the bond market amid a general panic mentality. These sell-offs have nothing to do with the depreciation of the Mexican peso, as they themselves are dollar money, but the biggest reason is the volatile political situation in Mexico and the knock-on effects of the sudden devaluation of the peso.

As soon as the foreign exchange market opened on the 20th, there were a large number of peso orders in the market, which surprised the Bank of Mexico, which is responsible for foreign exchange stability. In their expectations, although the peso depreciates and the foreign exchange market will be hit a lot, this is at most a temporary phenomenon, and when the market sentiment stabilizes, the peso will stay within their expected range.

This was just their expectation, in fact, on the 20th alone, the dollar funds fleeing from the Mexican market amounted to 8 billion US dollars. On this day, the Bank of Mexico did not have to do anything else, except to constantly use its foreign exchange reserves to buy and buy pesos in the market.

……

"Jingle bell—"

A noisy bell woke Zhongshi from his sleep, and he poked his head out of the warm bedding and looked around sleepily, only to realize that this was a superior suite at the Hilton Hotel.

Zhong Shi, who came back to his senses, smiled bitterly, looked at the phone on the bedside again, and couldn't help but smile bitterly again. His spirit has been in a state of high tension for the past two days, and it was not until yesterday that all the pesos were exchanged. When he returned to the hotel where he stayed yesterday, he threw himself on the bed, and he didn't even have time to take off his clothes, and he slept until now.

If it weren't for this phone call, Zhong Shi would have continued to sleep. However, he is not going to sleep, not many people know about this call, but once a call comes, it must be very important information.

"Hey, I'm Zhongshi." After Zhong Shi pressed the hands-free button, he threw himself heavily on the loose and comfortable bed, and asked a little absentmindedly, "Which one?" ”

"It's me, favorites!" An anxious voice came from the phone, the voice of a favorite who worked in Washington. Zhong didn't care about being polite, and as soon as he identified himself, he asked: "Mexico announced the depreciation of the peso yesterday, do you know?" This is a great opportunity to short the peso. ”

In Zhongyi's opinion, it is a very good time to lend pesos to sell short, or to short pesos in the currency futures market, so when he saw the relevant news, he contacted Zhong Shi as soon as possible, but after calling Hong Kong, he found that Zhong Shi was not in Hong Kong, but in New York, which was not far from him, and quickly called after asking for the number.

Sure enough, Zhong Shi thought secretly in his heart, but he still said lazily: "Short the peso, I have already done it!" ”

"What about the position?" Zhong Yi didn't delve into Zhong Shi's words, but was only slightly surprised, and asked about the scale of short funds.

Zhong Shi's head was still a little groggy. When I heard Zhongyi's question, I blurted out without thinking about it: "About $8 billion." ”

"$8 billion?" Zhong Yi suddenly shouted out in a faux puff, he was not very clear about Zhong Shi's net worth, but he also knew that Zhong Shi definitely didn't have so much money, "Where did you get so much money?" How did you know that the Mexican peso would depreciate? ”

Hearing Zhong Yi's exclamation, Zhong Shi's head was a little clear, and he suddenly realized that he had slipped through his mouth, and now he was in an inexplicable situation. However, his reaction was relatively fast, and his eyes rolled to the idea of coping with it: "I do OTC options." There are large enterprises doing forward hedging. I took the corresponding short pesos. The total amount of the target is $8 billion, which is not the use of so much money. ”

Hearing that it was an option, Zhong Yi didn't continue to ask. He knows that the underlying amount and quantity of OTC options are much larger than those of OTC options. But he changed his tune. Then he asked, "It's depreciated by 15 percent now." That means you've made $1.2 billion. What's next? ”

"What do you think?" Zhong Shi stopped talking now, and asked about Zhongyi.

"It's not good!" Zhongyi sighed and continued with some emotion. "Within Shijie Bank, a detailed study of the Mexican economy has begun to discuss the possibility of a rescue in the current situation. Although the progress is not very large, according to the information I have received, some of the prerequisites for these rescue jihua are that Mexico cannot hold on to the peso and is allowed to float freely in the market. ”

"Are you so pessimistic?" Zhong Shi asked a little strangely.

Zhongyi sighed again and said, "It's not okay if you're not pessimistic." The Mexican government is underestimating the liliang of financial institutions and overestimating its own ability to withstand risks. Our internal judgment is that the Mexican government is very likely to survive this crisis, and the hedge funds are just too powerful. ”

He just thought about it and talked about it, not realizing the role that Bell Stone played in this currency crisis, and he didn't know the specific situation. However, Zhong Shi at this end has a wry smile on his face, obviously he is his own strength, but he is considered by economists like Zhong Yi to be the liliang of hedge funds, but there is nothing wrong with this, because Tianyu Fund itself is a hedge fund.

"If possible, put these profits in your pocket as soon as possible." After sighing and sighing to himself for a while, Zhong Yi said another thing: "Recently, someone from China approached me and wanted me to help establish an investment bank, a domestic investment bank, what do you think?" ”

"Who?" Zhong Shi didn't take Zhongyi's words seriously, he was still thinking about the peso, and casually asked, "Is an investment bank so easy to establish?" What do they mean, do they ask you to contribute money or effort? ”

"There should be both." Zhong Yi frowned and thought about it, and continued with some uncertainty, "It's just a preliminary contact now, to see if I have any intention in this regard, and there are still many candidates for them, and I must be the only one." The person who came claimed to be the assistant to the president of Huaxia Commercial Bank, as if they were still in contact with Goodman and Stanley, two investment banks, and the specific one had not yet been decided. ”

"Huaxia Commercial Bank? Goodman? Stanley? Suddenly, the name of a company jumped out of Zhong Shi's mind, and the later Huaxia International Capital Co., Ltd. cooperated with Stanley to establish the first real investment bank in Huaxia in 95?

Speaking of this investment bank, we have to say that they occupy a position in the underwriting of Chinese state-owned enterprises. If this investment bank dares to call itself second, then no second investment bank dares to call itself first. Since its establishment, Huajin has been studying under Stanley, a well-known investment bank on Wall Street, and has an advantage in overseas markets. If large domestic enterprises want to list overseas or in Hong Kong, Huajin is often their first and only choice.

To give a simple example, the overseas listings of companies such as PetroChina and China Mobile are all underwritten by this investment bank, and in the process of underwriting, Huajin earns a large amount of underwriting fees.

"Promise them!" Zhong Shi, who had figured it out, said categorically. (To be continued......)

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