Su Yi glanced at the caller ID and was visibly surprised to see it was Qiu Guoyu's call.
"Hello, Elder Qiu,"
Su Yi answered the phone, greeting him with a smile.
"Xiao Su, you're in Hong Kong City now, right?"
Qiu Guoyu asked.
Su Yi replied,
"Yes, I am. What's up? Do you have something to entrust me with, Elder Qiu?"
Qiu Guoyu chuckled and said,
"Not at all. Recently, there have been many rumors about you in both domestic and international financial markets. I just arrived in Hong Kong City these past two days. Would you be interested in having a meal together and chatting for a bit?"
Su Yi replied,
"How could I refuse an invitation from Elder Qiu?"
With that, Su Yi quickly asked Qiu Guoyu which hotel he was staying at, then checked the time and left the company to go to the private room at the hotel they had agreed upon.
"Why did Elder Qiu suddenly come to Hong Kong City?"
Su Yi asked after they were seated.
Qiu Guoyu waved his hand, signaling the waiter to start serving dishes, and said with a smile,
"I was bored, so I came out for a walk. I heard you put all the money you made in the stock market last year into the forex market?"
"That's correct,"
Su Yi nodded slightly.
Qiu Guoyu said,
"The forex market is different from the stock market. The battle between longs and shorts is much more brutal, and if you gamble and choose the wrong direction, it can truly lead to irretrievable ruin with no room for error."
"I have fully considered the risks,"
Su Yi said.
"Alright then. I know that while your methods are aggressive in every operation, they are definitely not impulsive, reckless gambles made without confidence."
Qiu Guoyu said with a smile.
"Hmm,"
Su Yi nodded and continued,
"Elder Qiu, you called me, it shouldn't be just to remind me of the risks of forex trading, right?"
Qiu Guoyu chuckled,
"Of course, it's not just to remind you."
"Then..."
Su Yi asked tentatively.
Qiu Guoyu took a small sip of tea and said,
"I hear that your current position in the British pound exchange rate has fallen into a massive loss, continuously being squeezed by numerous long institutions in the market, and is already on the verge of liquidation?"
"The rumors are somewhat inaccurate, but generally not far off,"
Su Yi replied.
"It seems these market rumors are true. No wonder you were raising funds everywhere domestically last week, even incurring a debt of favor with the Huo family. But your company's internal control management seems to have too many issues, doesn't it? Your main position, established not long ago, was completely exposed to opposing institutions."
Qiu Guoyu said.
Su Yi smiled and said,
"To be honest with Elder Qiu, the information about the positions was intentionally leaked by my company's people."
"Intentionally leaked?"
Qiu Guoyu was surprised, completely not expecting this.
Su Yi nodded slightly and said,
"Yes."
"Why do that?"
Qiu Guoyu didn't quite understand.
"Wouldn't exposing your positions and strategic intentions too early give opposing institutions an an opportunity for precise sniping?"
Su Yi said,
"I want all these opposing institutions to enter the British pound exchange rate market."
"So... you were deliberately spreading rumors to create a long bait?"
Qiu Guoyu said, surprised.
"If it's bait, why did you establish such a large position at the very beginning? And why did you allow yourself to fall into such a completely passive situation now?"
Su Yi said,
"Don't the ancients have a good saying? 'How can one catch tiger cubs without entering the tiger's den?' If I don't do this, how could these opposing institutions follow with large positions?"
"So, according to you... You are convinced that the British pound exchange rate will fall, and firmly believe that you can withstand the combined short squeeze from these opposing institutions, and then usher in a final reversal?"
Qiu Guoyu said.
Su Yi said,
"If I didn't have this much confidence, I wouldn't have entered the market with hundreds of millions of dollars in a massive gamble, nor would I have used a large position to lure so many opposing institutions in."
"Why are you so sure the British pound exchange rate will fall?"
Qiu Guoyu asked.
Su Yi replied,
"Firstly, the continuous deterioration of the EU's economic fundamentals, as well as the sharp internal ideological conflicts over Brexit, all indicate that the current British pound exchange rate is still clearly overvalued.
Secondly, the shift in the Federal Reserve's interest rate hike strategy, and the hollowing out of the UK's own economic structure... all these issues suggest that the British pound exchange rate at this level is unlikely to hold.
Of course, what truly made me decide to massively short the British pound exchange rate was the proposal of the 'Brexit referendum.'
The emergence of this proposal essentially indicates that the UK's national strength is beginning to be depleted, insufficient to support the social welfare expenditures of many poor small countries within the EU, and unwilling to support and assist them.
Thus, the desire for Brexit, to live their own wealthy lives, and no longer help 'poor relatives,' will gradually form a powerful trend, stimulated by factors such as the hollowing out of the UK's internal economy, declining social welfare benefits, and fewer job opportunities, eventually changing the expected outcomes in people's inherent perceptions.
In summary... Based on my analysis and understanding, I believe the British pound exchange rate has no underlying logical basis for upward movement or appreciation. Since that's the case, why not short it?"
Qiu Guoyu nodded slightly and said,
"Your idea is indeed correct. But in financial trading markets, sometimes price movements are not determined by so-called underlying logic. Just like many stocks, where expectations and fundamentals are clearly poor, yet they can surge repeatedly and generate strong profits under the continuous inducement of major funds."
Su Yi said,
"Although price movements in financial markets are not solely dependent on expected logic, however... in the forex market, trading volume and liquidity are extremely high. Even central banks cannot forcefully change the trend development and expected direction of currency exchange rates by relying on capital advantages.
Therefore, I believe that when the expected logic and fundamental conditions are entirely bearish, and the market is constantly stimulated by negative news, even if the numerous opposing structures that enter the market can temporarily guide the British pound exchange rate's price action and create a short squeeze against me, in the medium to long term, such a trend that completely deviates from actual fundamentals will absolutely not last and will definitely be continuously corrected."
Qiu Guoyu said,
"But with your current enormous position size and the remaining available cash flow... can you truly hold on until the market corrects and the longs are exhausted?"
Su Yi said,
"I can't guarantee how long I can hold on, but I know that the British pound exchange rate will inevitably move downwards for a period after this, and that's enough.
Furthermore, since the 'Brexit referendum' proposal has now been approved by the UK cabinet, under the corresponding uncertain negative pressure, the longs dare not aggressively push the pound's exchange rate upwards.
They can only slowly guide various market funds to continuously form new collective forces in a long-biased formation.
After all, once the longs rapidly push up the British pound exchange rate, creating an extreme short squeeze.
Then, investors currently holding large long positions who have already made some profits will definitely close out a large number of positions, thereby creating new downward pressure on the market trend."
Qiu Guoyu thought for a moment and replied,
"According to your logic, if the British pound exchange rate continues to rise, many short-term longs closing positions to take profits would indeed lead to a certain degree of a 'longs killing longs' situation."
"Therefore..."
Su Yi paused and continued,
"after the long and short positions in the entire British pound exchange rate market have reached historical highs, reaching the scale of millions of lots, neither the shorts nor the longs can safely retreat and quickly close out their positions."
Amidst the massive standoff between longs and shorts.
Whether the shorts or the longs suddenly give up, it will attract a fierce onslaught from the opposing side.
As the saying goes, if the shorts don't die, the longs won't stop.
In such a large-scale standoff between longs and shorts, unless the confidence of the opposing side is completely shattered, no one can safely withdraw from the battlefield.
Qiu Guoyu nodded,
"Indeed. As the long and short positions in the British pound exchange rate market grow larger and larger, both longs and shorts are sinking deeper and deeper, and neither side can safely pull out."
After all, a large-scale short covering would cause the British pound exchange rate to surge rapidly.
This would inflict additional huge losses on shorts wishing to exit.
Similarly, large-scale long covering would also greatly strengthen the short forces on the trading screen, leading to a brutal 'longs killing longs' situation in the short term, as well as a full-scale short squeeze by the bears.
Su Yi smiled and said,
"And this situation, where neither longs nor shorts can withdraw, is exactly what I want."
"Exactly what you want?"
Qiu Guoyu couldn't understand.
Su Yi nodded slightly and said,
"If the British pound exchange rate is destined to fluctuate downwards in the future, then the more net long positions there are in the current market, doesn't that mean there will be more sufficient selling momentum in the future? Doesn't it mean that the volume of short positions I hold will be able to earn more excess returns from the market?"
Qiu Guoyu suddenly realized at this point.
"I see. So, from beginning to end, you've been digging a trap for the longs, and your bullish lure... the battle line has been drawn too long."
Su Yi said,
"There's no other way. There are too many smart funds among global financial institutions. If I don't actively jump into the pit and offer myself as bait, how can I get so many institutions to enter the market for a massive short squeeze? And how can I create the current situation in the British pound exchange rate market, with millions of long and short positions in a standoff?
Now, even slightly farsighted investment institutions can see that an epic long-short battle is brewing in the British pound exchange rate market.
And, under the continuous stimulation of news, more and more institutions, as well as retail investors and speculative funds, will become envious of the potential excess returns and throw themselves into this long-short battle."
"Throughout history, famous generals could foresee the outcome of a war before it even began,"
Qiu Guoyu said.
"Xiao Su, you are now... in the British pound exchange rate market, deeply entrenched in this increasingly intense long-short battle, just like those famous generals of ancient times who strategized and won battles a thousand miles away!"
Su Yi smiled and said,
"Elder Qiu, you flatter me."
Qiu Guoyu said,
"I was initially a bit worried about you. But now, after hearing what you've said, I have no worries at all. However... as the 'UK Brexit referendum' day draws closer, the long-short battle on the trading screen will likely become more and more intense, and the long counterattacks will also become fiercer and fiercer. With your current amount of capital, can you hold on until the very end?"
Su Yi said,
"If Elder Qiu is willing to provide some capital support, then facing the subsequent fierce long-short battle, my chances of winning would certainly be higher."
Qiu Guoyu laughed heartily,
"Haha... How much more capital do you need?"
Su Yi smiled and said,
"Naturally, the more the better."
Qiu Guoyu said,
"I don't have too much capital I can offer you at the moment. Since you're so confident, I'll give you 200 million US dollars then."
"Thank you, Elder Qiu,"
Su Yi said, a look of joy on his face.
He knew that Qiu Guoyu had come all this way, deliberately seeking him out for a conversation, and it definitely wasn't just to discuss ideas with him.
Qiu Guoyu said,
"This is my hard-earned retirement fund. Don't you go losing it all for me, and... I'm lending you this money with interest. As for how much the interest will be... that will depend on how much profit you ultimately take from the British pound exchange rate market."
Su Yi said,
"No problem. This investment by Elder Qiu will definitely be worthwhile."
"I hope so,"
Qiu Guoyu said with a smile.
He had proactively offered the funds to Su Yi, to invest in the British pound exchange rate market through Su Yi.
He had actually hesitated and deliberated for a long time before making this decision.
After all, this 200 million US dollars.
Although such a sum wasn't his entire fortune, losing it would still be a significant blow to him.
However...
After careful consideration for a long time, and also realizing the impending long-short battle in the British pound exchange rate.
He still chose to trust Su Yi.
Because he believed that with Su Yi's character, past operations, and investment experience, he wouldn't blindly gamble with his entire fortune.
Since Su Yi dared to invest his entire fortune, hundreds of millions of dollars, in this massive gamble, what did he have to be afraid of?
After Su Yi received the strong support of 200 million US dollars from Qiu Guoyu, he discussed many trading matters with Qiu Guoyu.
After that...
The next day, June 5th, Sunday.
Qiu Guoyu, seen off by Su Yi, took a flight back to Modu.
Then, on June 6th, Monday arrived.
Su Yi injected the received 200 million US dollars into the fund account, but did not immediately transfer it to the associated trading accounts of various platforms.
It was held as reserve emergency funds, hidden within the fund account.
And when his capital amount was further replenished.
After two days of brewing over the weekend, the British pound exchange rate once again rose higher than expected when the Asian market opened on Monday.
With the influx of countless follow-on long investors, and the continuous increase in net long positions, along with many short investors stopping losses and closing positions, it boldly launched another assault on the 1.5200 point level.
(End of Chapter)