As we all know, going short is also a way to invest. It is only through the combined effect of long and short positions that the stock market can truly become a "barometer" of the economy.

In other words, a capital market that is only allowed to rise is definitely not a complete and healthy capital market.

This time, the German government used an executive order to prohibit naked short selling, which is good from the starting point, because the behavior of short selling in the absence of spot is very speculative, and their starting point is to limit excessive speculation due to market sentiment.

But what the German bureaucrats ignore is that even in the United States, where the capital market is highly developed, it is easy not to use the means of banning short selling. Because once this killer weapon is sacrificed, the market often does not develop in the direction they expected, but the situation will become worse and worse.

Yes, it's the opposite.

To put it simply, it is normal for a stock to be bullish and bearish, and it is normal for opinions to differ. And once it is banned from shorting, it is almost a message to the market that the stock is very risky, and although this will not be the original intention of the management, the market will interpret it as something so bad that the government has to intervene in its movements.

As a result, players in the market will be desperate to sell the stock, and get back a little bit before it completely collapses. And the price of this stock will also accelerate its decline, and it can even reach the point of being worthless.

This is also the reason why, at the peak of the financial crisis, even though the SEC ordered the stocks of Goodman Company and Stanley Company to be restricted from shorting, these two stocks still plummeted.

The Germans clearly don't understand this, and they play much bigger than the Americans, with 10 major German financial stocks, eurozone government bonds, and the corresponding CDS.

This is almost telling investors around the world that these stocks, Treasury bonds, are so dangerous that governments have to step in to protect them.

This news has almost pushed the entire world capital market into a new round of turmoil.

Sure enough. The impact of the second day was immediate, with the 10 major German financial stocks falling sharply, with Deutsche Bank down as much as 4.6% and Commerzbank down 3.2% for the day.

Affected by this news, the three major U.S. stock indexes of Nasdaq, S&P, and Dow Jones all fell lower, falling more than 1% throughout the day. Investor panic soon spread across the ocean.

The commodity market has also been seriously affected, among which crude oil fell directly below the $68 mark, while various metal varieties of the LME have narrowed their gains, and the short-term benefits brought by the euro rescue mechanism have come to an end.

And the biggest impact is the euro!

This news from Germany not only sent a signal to the market that these targets are dangerous, but also indirectly told the market. Even after a bailout was agreed, the eurozone countries were not monolithic.

Obviously, Germany's move seems to be the national debt of the eurozone countries, but by the way, these 10 large German financial institutions have completely exposed their true purpose, which is still to protect their own financial base. Even if you don't short Frankfurt, investors can still short the Treasuries and CDSs of Eurozone countries in London and Paris.

Only in Frankfurt can the shares of these 10 major German financial institutions be bought and sold, so the Germans' intentions are almost clear.

This is almost an act of "sweeping the snow in front of the door". What tells the market is that even at this time, the Germans still can't forget what happened to their own one-third of an acre.

If it's a medium-sized country or an average country. The impact is almost minimal, but Germany, as the most powerful and wealthy country in the European Union, still keeps its own careful thinking on this issue, which cannot help but allow the market to completely amplify the impact of this news.

The ensuing statements of Germany's allies also rapidly amplified these suspicions.

The first is Brussels, whose finance minister unabashedly expressed his "surprise". He said that it is very inappropriate and irrational for Germany to introduce this policy at this time.

This was followed by a statement from Rome. However, their rhetoric was quite tactful, with the Italians saying that they respected the Germans' decisions, but that it was necessary for them to communicate with each other in making the corresponding decisions.

The most violent reaction was in France, where French Finance Minister Christine was the most violent. Lagarde said he was very annoyed by the Germans' decision. Berlin should inform other countries before introducing the policy. This is because such a move is likely to weaken the liquidity of the bond market, and it could have the opposite effect on countries with major fiscal problems.

Madrid and Lisbon also issued statements with similar contents, although the wording was different, but they were all dissatisfied with the sudden "attack" by the Germans.

For a time, the Germans became the target of public criticism.

"Are you ready?"

In the morning of Asia, Zhong Shi and Jiang Shan, who had not rested all night, reluctantly cheered up after pouring several cups of coffee, and Zhong Shi opened a pair of blood-red eyes and asked the traders who were gearing up, "The market will open soon, gentlemen, get ready for your short selling." ”

"We're ready!"

Looking at Zhong Shi's menacing expression, the traders couldn't help but feel a pang in their hearts, and immediately replied loudly.

At this time, the exchange rate of the euro against the dollar has reached the price of 1.2341 US dollars to 1 euro, a new low in the past two years.

This kind of opportunity Zhong Shi naturally has to seize.

"1.2340, give out 100 million euros of spot and buy short options with a total value of 100 million euros in the forward market." As the opening sound approached, soon Zhong Shi's order came.

To date, X-Spatial has built up huge positions in the euro spot market, totaling tens of billions of euros, as well as a similar size in short options. At present, Tianyu Fund still has close to 5 billion euros in cash on hand, which is set aside for short-term operations.

The traders quickly divided the work, and soon the sell order appeared in the market.

For the Asian market, the euro has seen a surge in trading volume over the past few months and has become the third largest trading market. This is because the euro is gradually becoming the reserve currency of many Asian countries. The trading volume of the euro and related derivatives has also increased rapidly, and in this case, the trading volume and volume of the euro and related derivatives in Hong Kong, Tokyo, Singapore and other places as well as in the OTC market in Asia have shown an explosive upward trend.

"Mitsubishi Bank takes over!"

Soon, the counterparty appeared, and in the OTC market, a financial institution from Japan took over the sell order.

"It's kind of interesting!"

Zhong Shi's face remained unchanged and he continued to command. "Another 100 million euros in spot, it's still the price just now, see if they are still interested in continuing to take it?"

Soon the results came out, the Japanese were not willing to continue to take over, they gave an option to take half of the amount of funds at a lower price, otherwise they would not eat these amounts.

"Keep looking for a counterparty!"

Because in the OTC market, the main counterparty is transacted by phone, when they enter into some kind of deal. It will appear on a centralized trading platform, so the price when each transaction jumps out is already the price after it was reached.

"The price has fallen to 1.2338!"

A quick-eyed trader shouted, "I don't know who is on both sides of the deal, but the amount is 10 million euros in stock, which is not very large." ”

"1.2335, 200 million spot, call now!"

Realizing that the news of Germany is beginning to have an effect on the market. Zhongshi decisively changed the price, "Société Générale, Banco Nacional de Italia, Deutsche Bank." These should be the big buyers of the market, ask what they mean! ”

"That's it, 1.2333, they'll take all the goods!"

The feedback was almost at a flying speed, and the trader on Deutsche Bank's side seemed to have received some kind of instruction and simply asked about the amount of money that Tianyu Fund had on hand. directly gave the price at which they took over.

"Sell it to them!"

Zhong Shi did not hesitate to order, "In addition, tell them that I still have 300 million euros in stock here, and ask them if they want more?" ”

The information of the transaction soon appeared on the OTC information platform. With a transaction of 200 million euros, the price of 1.2333 refreshed not only today's low, but also the amount of a single transaction.

"They asked for it, but the price was at 1.2331."

Soon, the results of the traders' negotiations came in: "It seems that they are trying to defend step by step, and so far they have eaten the amount of 300 million to 500 million euros, and I am afraid that they are far from reaching their target line." ”

"Sold!"

Zhong Shi didn't even frown, and ordered directly, "Tell them that I still have 500 million euros in stock here, and ask them if they want it?" ”

This time, it took a long time for the trader to report, "They want to see how the market moves today before making a judgment!" ”

Deutsche Bank realized that something was wrong and gave up.

But Zhong Shi didn't care, losing one of their counterparties, there were many counterparties in the market, including the central banks of various countries, and he didn't have to worry about not being able to sell the euro.

However, due to the emergence of the big seller of Tianyu Fund and the acceleration of the market's liquidity crunch in the euro area, the euro has appeared one-sided against the dollar, and although there have been buyers in the process, the exchange rate is still falling.

The price soon came to the level of 1.2250.

"Tell the Bank of Thailand that the price of 1.2230, the spot of 1 billion euros, and if they don't agree, go to the BOJ."

At this time, the counterparty of Tianyu Fund was changed to the Bank of Thailand, and after completing several transactions one after another, Zhong Shi gradually began to exert his strength, "I believe that this price will make them feel quite satisfied!" ”

"The Thais agreed!"

Soon, the Thais' reply came, and as Zhong Shi expected, the sharp 20 basis point cut made them realize that it was profitable.

But the next moment they regretted it, because the news appeared on the OTC market, which immediately caused a sensation in the whole market, for no other reason, although everyone knew that the euro would fall today, but the price of removing 20 basis points at once still made them feel scared.

At this time, the Tianyu Fund seized the opportunity to attack everywhere to stabilize the results just achieved. At this moment, another 1 billion euros appeared on the market, and this scale instantly knocked down BOT's move to raise the euro.

BOT would never have imagined that a fund would have such a large amount of power to influence the euro in Asia.

The euro in the Asia-Pacific region began to plummet, soon falling below the 1.2200 mark, and after breaking through this barrier, the decline did not slow down in the slightest and is still falling into the abyss.

1.2180、1.2170、1.2160…… All the way to 1.2150.

"Alright, now let's do the opposite!"

The current price has fallen to a new low since April 2006, and seeing that expectations have been met, Zhong Shi began to order traders to do the opposite, "Start buying now and close our previous positions as soon as possible." ”

Traders were quick to get their hands dirty, and X-Spatial Fund took advantage of the fact that the market was still falling and began to buy in the opposite direction. Naturally, buying in this situation is a very easy task, and it didn't take long for multiple small purchases to appear on the market. In the initial period, Tianyu Fund took advantage of the space of market transformation to absorb a large amount of spot.

By the time the market reacted, Tianyu Fund had closed nearly half of its positions and won a big victory. (To be continued.) )