As mentioned before, international financial speculators use currency lending methods to make money, so raising interest rates will increase the cost of lending.

When you borrowed money, the exchange rate was 7.8, and then you launched an attack on me. By the time the loan was settled, I had stabilized the exchange rate at 7.8, so you didn't earn a penny.

And because I have significantly increased the interest rate, the more you borrow from me, the more interest you have to pay me. Not only will you not make any money, but you will also lose a lot of interest, and you will lose money.

The interest of course fell into my pocket.

The financial system of Hong Kong Island is much healthier than that of Southeast Asia. The Hong Kong dollar does not have as high an interest rate as the Thai baht, so there is room for raising interest rates.

Once the international financial speculators want to attack the Hong Kong dollar through lending, they only need to raise the interest rate to make the international financial speculators lose money. The international financial speculators will naturally give up.

However, raising interest rates also has a disadvantage, which is that it will affect the stock market and housing market.

As interest rates rise and mortgage loans increase, the housing market will be affected. This is a matter of common sense.

Similarly, when interest rates are listed, funds will flow to banks, then the money in the stock market will decrease, and the stock market will fall. This is also common sense in economics.

On the contrary, when interest rates fall, it will stimulate the stock market and housing market.

If the purpose of raising interest rates is to prevent international financial speculators from borrowing currencies, the stock market will inevitably fall. At this time, the stock market will become the target of international financial speculators.

The Hang Seng is different from the Shanghai Composite Index. First of all, the Hang Seng is a T+0 transaction, that is, if you buy a stock on the same day, you can sell it on the same day.

When the Shanghai Composite Index was first established, it was also a T+0 transaction. Around 1995, it was changed to T+1, which means that if you buy a stock today, you can sell it tomorrow.

In addition, Hang Seng has no upper limit on the increase or decrease, while the Shanghai Composite has a 10% upper limit on the increase or decrease.

In other words, when you buy stocks on the Shanghai Stock Exchange, you can earn 20% or lose 20% a day, and you will not exceed this upper limit.

There is no such upper limit for Hang Seng. In theory, it is possible for a stock to rise higher than Tesla within a few hours, or to fall to the point of being delisted.

The most critical point is that Hang Seng at that time allowed naked short selling.

Ordinary short selling requires borrowing stocks first and then selling them short.

Naked short selling means that you do not borrow stocks, but directly sell non-existent stocks on the market. You only need to buy back these stocks before the delivery date, and the transaction is considered successful.

If naked short sellers cannot buy stocks to close their positions before the delivery date, then Ding Xiewu and his son will be their fate.

Since naked short selling is selling non-existent stocks, the trading volume will be very huge, which will have a huge impact on the stock price.

Naked short selling was also invented by the British. Countries or regions that follow the British financial system also allow naked short selling in their financial systems.

Hong Kong Island only banned naked short selling after the Asian financial crisis.

Western countries have obviously not been severely beaten in this regard. The United States even believes that naked short selling is a free transaction in the capital market, so there was the subprime mortgage crisis in 2008. At that time, the collapse of Lehman Brothers was also caused by naked short selling.

Harmful.

It was not until the outbreak of the subprime mortgage crisis that the United States, the United Kingdom and other countries suffered heavy losses that they successively introduced measures to combat naked short selling.

T+0 trading, with no limit on the rise or fall, plus the most critical naked short selling, this is simply a paradise for financial speculators.

How could a smart financial tycoon like Soros fail to grasp this!

Soros attacked the Southeast Asian financial system and used currency dismantling. But facing the linked exchange rate system, Soros knew that it was impossible to win through currency.

The strategy he adopts is to first force you to raise interest rates, and then use the stock market to launch a financial war. A wave of leveraged short selling can absorb a large amount of wealth from the stock market.

Therefore, in the financial defense war in 1998, the main battlefield was the stock market, not the foreign exchange market.

On the most critical delivery day, there was a battle between shorts and longs, with 350 million yuan of stocks changing hands every minute. In the end, with the support of the country, Hong Kong Island won the financial defense war.

At that time, international financial speculators conducted short selling at 7,500 points, and the settlement point that day was 7,851 points. On the next delivery day, the settlement point surged to over 8,000. Seeing that the general trend was over, the international financial speculators had no choice but to leave.
Chapter completed!