"Why are you so happy today?"
Noticing Fang Wanqing, who was beaming in front of the computer, her colleague next to her asked with a light laugh.
"Nothing," Fang Wanqing replied, "I just suddenly thought of something and found it a bit funny."
"Then why are you staring at the British pound's exchange rate trend?" the colleague asked puzzled. "Don't tell me you shorted British pound contracts this morning and last night? Wow... quickly tell me how much you shorted and how much you earned?"
Fang Wanqing rolled her eyes at her and said,
"Of course not, I was just... casually looking. After all, today's UK referendum on Brexit is a major event for the entire world. Its results affect not only the financial markets but also have a significant impact on the future direction of the global economy, which is closely related to our venture capital department's business."
"That's true," the colleague thought for a moment and replied. "Judging by current market news, it's likely the referendum result will be in favor of Brexit. Speaking of which, our company's hedge fund trading department should have made a huge profit from shorting the British pound exchange rate in this round."
"Hmm." Fang Wanqing nodded. "Frederick's 'Evolution No. 1' fund product indeed shorted a significant number of British pound exchange rate contracts."
"I'm so envious," the colleague said. "If the hedge fund trading department makes a huge profit this round, I wonder how much the quarterly bonus will be. Sigh... in comparison, our department feels a bit like a 'clean water' department. It's almost the end of the month, and our performance is severely below standard!"
"There's nothing to envy," Fang Wanqing said. "Our department basically has guaranteed income regardless of good or bad times, but the hedge fund trading department is not necessarily so."
"That makes sense," the colleague smiled, feeling a little more balanced.
While the two were talking, seven more voting districts announced their final referendum results.
It was seen that according to the latest final referendum results from the voting districts, the gap between the number of people supporting Remain and those supporting Leave not only did not narrow but continued to widen.
By this time, more than 40 voting districts had announced their final referendum results.
Among these voting districts that announced final referendum results, the number of people supporting Leave had already surpassed those supporting Remain by nearly 180,000.
This meant that the final referendum outcome was increasingly leaning towards a Brexit result.
At the same time, as the gap between the number of people supporting Leave and those supporting Remain widened again.
The trend of the British pound exchange rate also plummeted rapidly again.
At 9:11 AM, the British pound exchange rate broke through the 1.4300 level.
Long sentiment in the market, along with numerous major long institutions, saw their confidence further collapse.
At 9:21 AM, the British pound exchange rate broke the 1.4200 level, completely piercing the psychological defense line of the market's long positions.
At 9:25 AM, the British pound exchange rate fell to around the 1.4100 level, approaching its lowest exchange rate during the 2008 global financial crisis.
"It's collapsing, collapsing... the longs in the market have completely lost their resistance."
Seeing the British pound exchange rate approaching the 2008 financial crisis bottom, a retail investor in a currency market discussion forum, where numerous speculative retail investors gathered on a global online platform, exclaimed in a hurry.
"A long-killing-long situation has formed. Under this trend... whether it's expectations or market movements, it's hard to reverse, isn't it?"
"My god, starting from the 1.5000 level, it has dropped almost 1000 points in just two or three hours."
"The shorts are really fierce. There must have been many longs who got margin called in the market this morning."
"Sigh, luckily I stopped loss around the 1.4600 level. This is... too scary."
"The number of people supporting Leave has already exceeded those supporting Remain by nearly 200,000. With such a large advantage... it must be very difficult for the referendum result to turn towards Remain, right?"
"It's not that a reversal has no chance at all, just that the chance is very small."
"The referendum results for major core regions like London, Manchester, Leeds... are still not announced. As long as one of these major regions' voting results overwhelmingly leans towards Remain, then the current result could be reversed. But... what are the odds?"
"Didn't they say that according to preliminary vote counts and various institutions' predictions, over 60% of London's population supports Remain? If this data is true and reliable, then the 200,000 person gap could be made up, given London's total population and over 60% Remain support."
"Hehe... institutional predictions? Look at the voting results from previous districts, how many of those institutional predictions were accurate?"
"To be precise, only one or two voting districts had accurate predictions."
"Therefore, institutional predictions and so-called market expectations are completely unreliable in the face of such a referendum event. Trading based on them is very likely to lead to huge losses."
"But the British pound exchange rate has already plummeted by almost 1000 points from this morning's high. Shorting it again would carry considerable risk, wouldn't it?"
"I think we should still respect the market trend. Chasing shorts is correct, but one must set a good stop-loss."
"After this 1000-point plunge, those without stop-losses should have already been margin called."
"The major long institutions in the market probably haven't given up yet. Looking at the number of open long positions in the market, after the British pound exchange rate fell below the 1.4200 level, it actually stabilized and stopped rapidly decreasing, and currently shows a slight increasing trend."
"It seems many people are bottom fishing before the referendum results are officially confirmed!"
"With a 1000-point profit margin, many short-term shorts are currently closing their positions in a concentrated manner."
"It looks like the downtrend has stabilized around the 1.4100 level."
"Mainly because the voting results from the major core regions have not been announced, uncertainty still exists."
"Sigh, not shorting at the high earlier was a huge loss. Now, I'm a bit scared to short again, just in case the result reverses, then it's over."
Amidst the intense discussions among numerous retail investors...
Regarding the British pound exchange rate trend, given the continued uncertainty surrounding the final referendum result.
Short institutions that had made huge profits in the market, as well as numerous speculative short traders who had previously chased shorts, now began to take profit and cover their positions.
With large-scale short covering, open short positions in the market sharply decreased.
At the same time, as the British pound exchange rate began to stabilize around the 1.4100 level.
Numerous long funds bottom fishing also began to enter the market.
This caused the British pound exchange rate, after a brief oscillatory pause around the 1.4100 level, to rebound rapidly, recovering to the 1.4150 level in just two or three minutes.
"It seems there's a large amount of short capital in the market taking profit and covering positions!"
Noticing the rapid rebound of the British pound exchange rate after stabilizing at the 1.4100 level, and also observing the rapid decline in the number of open short positions in the market, Meng Shengfei from the Investment Department II of 'Huayin International' in Hong Kong, exclaimed via instant messaging.
"Indeed, many short funds are covering,"
Kong Fansheng observed the market trend and responded.
"There's already about a 1000-point profit margin from this morning's high. It's perfectly reasonable for many short funds to take profit. Moreover, the voting results for many major core regions are still undetermined, and the final referendum result could still be in favor of Remain. In this relatively uncertain situation, taking profit at the right time from huge floating gains is absolutely correct."
After the continuous plunge of the British pound exchange rate in just these two or three hours.
The Investment Department I, led by Kong Fansheng, holding nearly 200,000 lots of British pound short contracts, already had a floating profit exceeding $1.4 billion.
Facing such massive floating profits and the subsequent uncertain market.
Not to mention other major short institutions, even he himself felt a strong desire to take profit and close positions.
"The number of people supporting Leave has already exceeded those supporting Remain by 200,000," Su Yi said. "It's already quite difficult to reverse this situation."
"London's final referendum results have not yet been announced, so theoretically, a reversal is still possible," Frederick said. "However, this would require no further surprises from other major core voting districts, and such 'surprises'... judging from this morning's voting results from various districts, seem to be quite numerous."
"Mr. Su, aren't you planning to reduce your positions and take some profit at this level?" Meng Shengfei asked.
Because he had decisively added nearly 20,000 lots of short contracts around the 1.4600 level earlier, the floating profit of the positions held by the Investment Department II, which he now oversees, had already exceeded $1.6 billion.
Such a massive floating profit was the largest investment floating profit in his career.
Therefore, he simply couldn't suppress the urge to reduce positions and take profit.
"No plans to,"
Su Yi replied with a smile.
"The major long institutions in the market haven't completely collapsed yet, and at the same time, market expectations for the referendum result haven't fully materialized.
Although the British pound exchange rate has fallen by nearly 1000 points from its high at the start of trading, from here downwards... when the expectation of a Brexit referendum result officially materializes, accompanied by all the longs in the market collectively cutting losses or being forced to liquidate, there will definitely be huge downside potential.
We hold massive floating profits and already have absolute control of the market, so there's no reason to close positions and take profit before the expectation fully materializes."
"Mr. Su's trading logic and perspective are truly impressive," Frederick couldn't help but praise upon hearing Su Yi's words.
He knew that, based on the positions of the "Huayi Chengyuan No. 1" main fund managed by Su Yi, the fund's floating profit at this time could very well have already exceeded $2.3 billion.
To not be carried away by such massive floating profits.
And to maintain absolute calm analysis and clear logic.
He felt nothing but admiration for it.
Su Yi smiled and replied,
"In terms of composure, I still have a gap compared to Mr. Frederick."
"Haha..." Frederick burst out laughing and said, "Mr. Su is being modest. In this round of the British pound shorting battle, Mr. Su is certainly capable of making a name for himself in the global financial world."
As the few people talked briefly.
The British pound exchange rate trend had already rebounded and recovered the 1.4200 level.
Frederick remained calm and indifferent, facing the instant withdrawal of hundreds of millions of dollars in profit from the fund account.
And Meng Shengfei, despite agreeing with Su Yi's analytical logic and his viewpoint, looked at the rapid rebound of the British pound exchange rate and the rapidly withdrawing profits in the fund account.
He hesitated for about ten seconds.
Finally, he couldn't help but issue trading instructions to the various trading groups in the trading room to take profit and close positions.
He had the trading groups cover and close more than half of their short positions at market price, leaving only approximately 70,000-plus lots of short positions.
Meanwhile, although Kong Fansheng was much more emotionally stable than Meng Shengfei.
He thought for a moment and, to be conservative, still closed about one-third of his short positions.
Accompanied by the profit-taking and closing of positions by major short institutions in the market, similar to the two investment departments of 'Huayin International,' and the continued entry of bottom-fishing funds.
Even as time passed.
The final voting results from several major voting districts announced later still slightly favored supporting Leave.
However, the British pound exchange rate continued its rebound, further rapidly recovering to the 1.4250 level.
"The British pound exchange rate trend is actually moving in the opposite direction to the market's referendum data release. Could this be due to the final voting results from the major core voting districts being leaked in advance? Could the referendum result be hinting at a reversal towards supporting Remain?"
Noticing the British pound exchange rate rapidly recovering some of its earlier losses and beginning to show a reverse trend compared to the market's referendum data results, Yamamoto Hisaichi, a core trader in the main fund trading room of 'Mitsui Sumitomo Hong Kong Investment Company,' which had already been forced to reduce most of its long positions, spoke with a hint of doubt.
Sato heard Yamamoto Hisaichi's words, stared intently at the market trend, and also had this doubt in his mind.
However, despite these doubts.
At this moment, he dared not add any more long positions.
A similar situation also occurred in the 'Huifeng Huanyu No. 1' main fund trading room.
Fund manager Godfrey gazed at the rapidly rebounding British pound exchange rate, pondered for a while, and also had this speculation.
He then turned to Jeremy, head of intelligence, and asked,
"Is the Bank of England still making no moves? And are there still no latest updates regarding the final voting results from core regions like London, Leeds, Manchester...?"
Jeremy shook his head, put down the international phone he had been connected to, and replied,
"The Bank of England has still not made any further market operations. As for the referendum news, the information we can obtain is basically synchronized with what is released online."
"Sigh..." Upon hearing Jeremy's words, Godfrey sighed helplessly.
"Mr. Godfrey, the rapid rebound of the British pound exchange rate at this time doesn't seem to be due to a change in news, but rather to a large amount of short capital in the market taking profit and covering positions,"
Ernest, head of the market research department, pondered for a while and said.
"I think we should seize this opportunity to continue concentrating on reducing short positions and covering long positions."
"Continue covering?" Godfrey frowned.
Ernest nodded and replied,
"The number of people supporting Leave has already exceeded those supporting Remain by 200,000. This situation is very difficult to reverse. In such extreme circumstances, we cannot gamble on low-probability outcomes. While the market is currently seeing a large amount of short covering and bottom-fishing funds entering, what we need to do is continue to close positions and stop losses, rather than hoping for a market reversal, because that probability is simply too small."
Currently, the size of the long positions held by their institution is still over 200,000 lots.
Long positions of this size have caused their fund's total losses to exceed $2 billion.
If they do not continue to close positions and stop losses.
Once the market trend continues to deteriorate later, the extreme risks they face with their positions will likely expand rapidly, causing even more severe losses.
(End of Chapter)