"However, with our strength, it won't be easy to hold onto the main long forces in the market and keep the pound exchange rate suppressed at the 1.5300 level,"
replied Kong Fansheng, manager of the Institutional Investment Department I at Huayin International.
"At this moment in the pound exchange rate market, even though international capital institutions like Citibank, Blackstone Group, and BNY Mellon have started to turn from long to short, the overall market expectation and the dominant direction of market sentiment still lean entirely towards the long side.
Furthermore, we don't have an advantage in terms of capital, and market news is temporarily unable to stimulate bearish sentiment in the market.
Merely by continuously injecting funds and increasing the number of short orders, it will likely be difficult to withstand the counterattack from the main long forces in the market and continuous short squeezes!"
Su Yi said,
"Naturally, it won't just be a counterattack on the trading screen. On the market news front, we also need to continuously guide, continuously capture negative news, and leverage media power to continuously amplify sentiment.
Only a multi-pronged attack from the trading screen, news, and sentiment can truly shake the confidence of the main long institutions in the market, as well as other investors or speculators who are following the long trend, and only then can we truly withstand the longs' counterattack."
Frederick nodded and said,
"Indeed, a multi-front attack is necessary. However, the shift from long to short by institutions like Blackstone Group, Citibank, and BNY Mellon will likely have a significant emotional impact on the market even without much promotion.
Also, since these institutions have already entered the market to short, their corresponding bearish analysis reports should be released soon. After all... these institutions are very adept at using news to stimulate sentiment, as Mr. Su mentioned.
Of course, our institution's various media outlets and analysis teams will also intensify efforts to attract more short main funds, as well as short investors and speculators, with bearish reports and negative news promotion.
At the same time, we hope to shake the confidence of the longs in the market and accelerate the covering of positions by long investors."
Su Yi said with a smile,
"Then I'll leave it to Mr. Frederick. In short... our current strategy is to vigorously resist the longs' counterattack, suppressing the pound exchange rate around the 1.5300 level.
Only by inducing the main long institutions in the market to continuously inject funds, thereby raising their overall holding costs, can we achieve more and greater results in the subsequent long squeeze strategy."
"Then let's begin."
A surge of excitement appeared on Meng Shengfei's face.
After speaking, he didn't wait for Su Yi to issue new trading instructions, but immediately turned and instructed the traders of the Investment Department II behind him to continue injecting funds into the pound exchange rate market, pushing against the volatile upward pound exchange rate with continuous new short orders, to suppress the pound exchange rate back to the 1.5300 level.
While he was giving corresponding trading strategy instructions to the traders,
Kong Fansheng, Su Yi, and Frederick also quickly issued corresponding trading instructions to their respective trading teams, telling everyone to continue placing short orders to counter the pound exchange rate that was rising again on the trading screen.
As Huayi Capital, Huayin International, and Aberdeen Asset, these several allied short institutions, began to massively increase their short positions in the pound exchange rate market, the trend of the pound exchange rate instantly changed.
As market trading time progressed, the pound exchange rate formed a violent volatile pattern around the 1.5300 level.
At the same time, the market's intraday volume, compared to previous days, also increased significantly year-on-year, as if the main long and short institutions in the market were fiercely contending for this important threshold.
"The volume has nearly doubled compared to yesterday!"
Seeing that the changes in long and short trading volume in the pound exchange rate market were almost comparable to the European session, someone among the numerous speculators and investors gathered on domestic and international foreign exchange investment forums exclaimed in surprise.
"The pound exchange rate's trend is becoming increasingly erratic."
"Looking at this chart pattern, the short forces in the pound exchange rate market are still very strong. I personally believe that in the range above the 1.5300 level, the longs may not gain much advantage, and... I heard that Blackstone Group and Citibank have significantly reduced their long pound positions and are fully turning from long to short."
"It's not just a rumor, it's true."
"Why did these two major institutions suddenly turn from long to short?"
"I just read the bearish reports from these two institutions on the pound exchange rate, and I feel that many of their views surprisingly coincide with some of the bearish articles Mr. Su previously published online. This indirectly suggests that some of Mr. Su's views might indeed be correct."
"Hmm, combining the bearish reports from Blackstone Group and Citibank, the more I think about it, the more I feel Mr. Su's words make sense, and the more I think the pound exchange rate cannot hold at this level."
"Since last night when Blackstone Group and Citibank released their bearish reports and publicly shorted the pound exchange rate... it's clear that short positions in the pound exchange rate market are rapidly increasing, while... the growth rate of long positions has significantly decreased."
"From the charts, the shorts have once again gained the initiative."
"However, the net open long positions in the market are still very alarming."
"Trend reversals don't happen overnight. I think as long as the number of net open long positions in the market continues to decrease, that's enough to indicate that the market trend and expectations are gradually shifting."
"Citibank and Blackstone Group still wield great influence!"
"That's for sure. These are all top ten global asset management institutions. Once these big institutions clearly turn bearish, their influence on market trends is absolutely not to be underestimated."
"I originally thought Mr. Su would most likely not be able to get out unscathed this time, but who would have thought... this is truly a divine assist for Huayi Chengyuan No. 1 main hedge fund managed by Mr. Su!"
"It's not just Citibank and Blackstone Group providing divine assists, but also Aberdeen Asset, Huayin International... these affiliated institutions."
"Hehe, with such a strong counterattack from the shorts in the market, maybe... Mr. Su might actually get out unscathed this round."
"If the longs fail and a stampede occurs, Mr. Su might not only get out unscathed but also reap a significant profit from the extreme volatility of the pound exchange rate."
"With so many net long positions in the market, once a long stampede occurs, the consequences would be unimaginable."
"Given the current number of long and short positions in the pound exchange rate market, whether a long stampede or a short stampede occurs, it will have an extreme impact on the trend of the pound exchange rate."
"Hehe, it feels like market expectations are clearly shifting."
"Do you think the pound exchange rate market started showing such large volume during the Asian session because Mr. Su is secretly continuously increasing his short positions?"
"It's possible, entirely possible."
"Establishing short positions at this level, one could say, is already bottom-fishing on Mr. Su's position, right?"
"From publicly available market information, the large number of short orders Mr. Su holds has an absolute holding cost below the 1.5000 level. Entering short at this time truly counts as bottom-fishing on Mr. Su's position."
"Anyway, I am steadfastly bearish on the pound exchange rate."
"It feels like the further market trading time progresses, the higher Mr. Su's chances of winning."
"I really didn't expect that the main short forces in the market still have such strong counterattacking power. It seems... fate truly isn't giving up on Mr. Su!"
"At the 1.5300 level, the probability of success for shorting is clearly higher than for going long."
"I've already established short orders, hehe... just waiting for the pound exchange rate to fall."
"No matter what, this is absolutely an unprecedented long-short drama. Such a massive number of long and short positions in the market... I've truly never seen before."
Accompanied by intense discussions among numerous investors and speculators, and with the further progression of market trading time, the number of open short positions in the market continued to increase, and the number of net long positions continued to sharply decrease.
"Sigh... why does this trend not feel good!"
At 10 AM, in Hong Kong, inside Tianhe Capital's main fund trading room, Gu Chijiang saw that the 1.5300 level for the pound exchange rate was in jeopardy, and the string in his heart instantly tightened again.
"The net long positions in the market are sharply decreasing,"
Replied Xie Hongxing, the trading team manager.
"It feels like since major institutions like Blackstone Group and Citibank issued their bearish reports last night, many long position holders in the market have been broadly covering their positions this morning."
"That's indeed the case. What do you think?"
Gu Chijiang nodded and asked.
Xie Hongxing thought for a moment and said,
"Judging from the underlying logic, the expectation of a sustained rise in the pound exchange rate still exists. Many of the long orders we increased above the 1.5350 level have now fallen into a floating loss.
I believe that since the underlying logic hasn't changed, and at the same time, other main long institutions in the market show no signs of large-scale covering of positions, then... I predict that after a severe oscillation at this level, with a batch of long position holders covering their positions, and after the short main forces' counterattack ends, the pound exchange rate will definitely have another upward surge.
I think if we are to appropriately reduce our positions and cover some long orders, that would be the right time. Covering and reducing positions now... might be exactly what the main short forces in the market would be most pleased to see."
"You're right,"
Gu Chijiang nodded slightly, his eyes still focused on the pound exchange rate market.
After a moment of contemplation, he said,
"In that case, let's wait and see how the pound exchange rate changes after the market shifts to the European trading session. Also, pay close attention to information from the UK itself."
"Okay,"
Xie Hongxing nodded.
Just as the two were considering adjusting their trading strategy in response to the current pound exchange rate trend,
At the same time, in the trading department of Huifeng Huanyu Hedge Fund in Hong Kong, fund manager Godfrey was staring at the pound exchange rate trend.
Although he was somewhat surprised by the shorts' counterattack, he still did not abandon the trading strategy of continuing to increase long positions and force a short squeeze.
"Mr. Godfrey, it feels like the 1.5300 level for the pound exchange rate can't be held!"
As Godfrey continued to instruct traders to increase long positions, Sato, the asset management manager of Sanjin Jiayou Investment Company, which was linked with him, frowned and warned,
"Once this barrier is broken, if the pound exchange rate falls back to its recent lows, it will likely further embolden the main short forces in the market, thereby creating stronger suppression on the pound exchange rate's chart trend."
Godfrey said confidently,
"No need to worry, Mr. Sato. According to information our institution has received, preliminary voting results from UK government agencies indicate that less than 40% are in favor of Brexit. Coupled with the Bank of England's continuous open market operations, in my opinion... all temporary declines are merely traps for shorts."
Sato said,
"I fully trust your institution's advantage in information channels. But the shorts' counterattack in the market is indeed somewhat unexpected, especially the bearish views and short-selling actions of institutions like Citibank, Blackstone Group, and BNY Mellon, as well as Aberdeen Asset's continued rapid increase in positions... These apparent market signals all indicate a continuous surge in short forces in the market, which is completely different from our previous expectations."
Godfrey said,
"The shift from long to short by these institutions has indeed caused some disturbance to the short-term trend of the pound exchange rate market.
However, the main positions of institutions like Pacific Capital, Barclays Bank Foreign Exchange Trading Department, Vanguard Capital, UBS International Capital, Nomura Bank Investment Department, Goldman Sachs Capital... are already skewed towards the long direction and are still continuously increasing positions.
Furthermore... although the market's net long positions are decreasing, the number of open long positions is still increasing.
In my opinion... This is merely a situation where short capital institutions in the market, such as Huayi Capital and Aberdeen Asset, which have relatively large floating losses, are using the bearish reports from institutions like Citibank, Blackstone Group, and BNY Mellon, as well as some of their capital, to stimulate the market's potential short forces and guide market sentiment towards short-selling.
In other words, this is merely an ineffective counterattack by the shorts in the market. As long as the temporary emotional impact passes, and the marginal effect of fund guidance by the main short forces diminishes, then the market trend will soon return to its correct trend and trajectory.
After all, the underlying logic for the sustained appreciation of the pound exchange rate has not changed. The overall strategy of major long institutions in the market to squeeze Chinese capital, blow up short positions, and force main short forces to stop-loss and cover has not changed.
On the contrary, the more funds the main short forces in the market invest, the harder it will be for them to reverse the losing situation."
"Hmm, I hope so,"
Sato responded after listening to Godfrey's analysis and thinking for a moment.
"Currently, our institution's long positions are already quite large, making it impossible to continue increasing positions. We only hope that the subsequent trend of the pound exchange rate will truly, as Mr. Godfrey said, quickly recover lost ground and reach new highs."
Godfrey said with a smile,
"That's for sure. No matter how much the main short institutions in the market stir things up, the moment the referendum results are released on June 23rd, they are bound to meet their doom."
(End of Chapter)