"A plan to ambush Wall Street short-selling capital?"
Hearing Godfrey's words, Gu Chijiang felt a tremor in his heart, saying disbelievingly,
"Is the Bank of England really preparing to enter the market themselves?"
"This news... is it true or false?"
As Gu Chijiang's heart trembled, Sato of Mitsui Sumitomo Investment also felt somewhat shocked.
Similar to 'Tianhe Capital'.
Due to continuous position increases in long positions, the large-scale long positions held by the 'Mitsui Sumitomo Foreign Exchange Investment Main Hedge Fund' product, managed by Sato, had also fallen into a state of overall floating losses.
Although his mindset appeared slightly more stable than Gu Chijiang's, the internal pressure was equally immense.
After all, this round of heavily speculating on the GBP exchange rate.
It was a high-stakes gamble where he defied all dissenting opinions and put his career on the line.
Now, with the market trend clearly falling short of expectations, and Wall Street financial giants all starting to shift from long to short, it was hard for the pressure in his heart not to be heavy.
Godfrey smiled and said,
"Naturally, it's true. Whether considering it from the perspective of national interests or the Bank of England's monetary policy direction, theoretically, the Bank of England will not allow the GBP exchange rate to continue to fall sharply, especially since... apart from a few Wall Street capitals like 'Goldman Sachs', 'BNY Mellon', 'Citibank', and 'Blackstone Group', the vast majority of major institutions globally still generally lean towards a bullish outlook for the GBP exchange rate trend.
At the same time, according to the preliminary vote count results on the 23rd referendum circulating in the market. The referendum result on the 23rd is also highly likely to favor remaining in the EU.
Therefore, apart from the market sentiment fluctuations caused by 'Goldman Sachs' suddenly turning from long to short, the overall fundamentals, news, and capital flow direction in the GBP exchange rate market are not problematic, and the underlying logic for going long has not changed.
As fund managers of major institutions. I believe that in terms of trading mindset and operational strategies, we must try our best to eliminate the interference of transient emotions and must be able to see through phenomena to grasp the essence."
"Mr. Godfrey is right."
Gu Chijiang listened to Godfrey's words and hurriedly responded with a smile.
The GBP exchange rate long positions held by 'Huifeng Huanyu' Hedge Fund were far larger than those managed by his 'Tianhe Capital'.
Since Godfrey could remain so calm and composed, he naturally shouldn't show panic.
Sato also responded,
"Thinking about it carefully, Mr. Godfrey's logic is indeed correct. It's just that 'Goldman Sachs'' sudden shift from long to short still brought huge shock to the market, leading to many long positions in the market covering their shorts, and also causing many off-market short funds to follow suit and intervene.
If the Bank of England doesn't intensify its intervention in the exchange rate market. It is estimated that the GBP exchange rate trend will be relatively under pressure before the referendum results are released on the 23rd."
Godfrey said with a smile,
"I don't think so. First, the one that turned from long to short is just a major hedge fund under the 'Goldman Sachs' Group, not the entire Goldman Sachs investment bank institution. Also... since the news broke out last night, the GBP exchange rate has retraced from around 1.5300 to about 1.5170 now.
It can be said that the market impact caused by this news has already been reflected in the market trend. Subsequently, as the marginal impact of the news decreases, and as many intraday positions take profit and stop loss.
I believe that after everyone calms down, the long forces on the market will instead be able to continue to gain the upper hand, and the GBP exchange rate trend also has a clear demand for a rebound.
What's more... To my knowledge, major long institutions in the market such as 'Pacific Capital', 'UBS International', and 'Vanguard Capital' are still continuing to increase their long positions. Furthermore, the current ratio of long to short positions in the market still shows a net long position. And the net long positions still exceed 700,000 lots.
Overall, the market's general direction is still clearly biased towards long positions. We don't need to worry too much, nor do we need to be nervous about 'Goldman Sachs' suddenly turning from long to short.
After all, regarding the actual situation within the UK and various news related to the GBP exchange rate. If you ask me, 'Goldman Sachs Group' understands it far less thoroughly than our institutions do."
Gu Chijiang let out a long breath and said,
"I hope it can rebound. After the overall positions fell into a state of floating losses, under this passive situation, I currently dare not easily continue to increase long positions."
Sato also responded at this moment,
"Although our fund still has a good amount of reserve funds, with the current market trend being fully suppressed by short sellers, I also dare not rashly increase positions. We can only rely on Mr. Godfrey to withstand the pressure of the rampant short sellers. Once the GBP exchange rate rebounds and sentiment recovers, returning above the 1.5200 support level, our institutions can then continue to assist in suppressing the short sellers."
Godfrey saw that the GBP exchange rate trend had not yet shown any extreme downward volatile collapse.
The two instantly chickened out.
For a moment, he felt somewhat disdainful of their actions.
However, he knew that everyone was currently in the same boat, all holding large GBP long positions, and were all stakeholders.
It wasn't appropriate to openly show dissatisfaction, so he could only give an awkward smile and replied,
"In that case, our institution will have to lead the charge first."
After speaking, Godfrey turned around and issued trading instructions to the traders to continue increasing long positions in the GBP exchange rate.
Although their institution already held a very large amount of GBP long positions.
Due to the massive scale of the fund's asset management, this position size, approaching 300,000 lots, still only accounted for less than 20% of the entire fund's positions.
This also meant that Godfrey still had a large amount of reserve funds available.
And could relatively maintain market initiative.
As 'Huifeng Huanyu' main hedge fund continued to largely increase its GBP long positions during the Asian session, and as many intraday retail investors in the market carried out profit-taking and stop-loss operations.
The GBP exchange rate, after a rapid decline at the beginning of the Asian session, indeed rebounded after touching a low of 1.5142.
"Hehe, I really didn't expect... 'Goldman Sachs Group', this thick-browed and big-eyed fellow, actually turned from long to short in the middle of the night yesterday. This is a big help for us, after all, in the global financial market, this institution's influence is not small. Once this institution turns short, many speculative funds, both in and out of the market, even if they don't follow suit, will enter a wait-and-see state."
Just as 'Huifeng Huanyu', this main hedge fund, continued to increase its long positions, and while fund managers from institutions like 'Mitsui Sumitomo Investment' and 'Tianhe Capital' were feeling uneasy, in the trading room of Investment Department II within 'Huayin International', Meng Shengfei said with a smile.
"'Goldman Sachs'' turn from long to short is indeed somewhat surprising."
On the linked communication channel, Kong Fansheng of 'Huayin International' Investment Department I immediately responded,
"I remember that a week ago, this institution was a firm long institution in the GBP exchange rate market. I don't know why it suddenly turned short."
Su Yi heard Kong Fansheng's question, pondered for a moment, and responded,
"It's not strange. As the referendum on the 23rd approaches, more and more people will see the inside story of this Brexit referendum.
More and more smart money, both in and out of the market, will realize that this Brexit referendum is not just about whether the UK will remain in the EU system, but also concerns the inevitable internal conflicts and economic decline of the UK, a former global hegemon now in decline.
They will further discover that... regardless of whether this Brexit referendum occurs or not, the long-term downward trend of the GBP exchange rate will not change and will not be contained."
Meng Shengfei nodded and said,
"Hmm. CEO Su's anticipated judgment on the GBP exchange rate trend is indeed very farsighted, and his insight into the expected shifts of major global institutions is equally considerable. Now, the short-selling power in the market is truly getting stronger and stronger.
With the intervention of Wall Street capital like 'Goldman Sachs Group', 'BNY Mellon', 'Citibank', 'Blackstone Group'... We have already completely escaped the situation of fighting alone. And judging from the market trend... The feedback on the GBP exchange rate trend has also begun to fully lean towards the short direction.
This makes me feel that we are not far from victory, and also that the situation where the main long institutions in the market and numerous long retail investors and speculators trample each other is getting closer."
"Mr. Meng's expectations might be a bit too optimistic."
As Meng Shengfei expressed his views, Frederick, the persistently thoughtful lead hedge fund manager of 'Aberdeen Asset Evolution No. 1', interjected,
"While 'Goldman Sachs'' shift from long to short certainly surprised everyone, attempting to use this influence alone to completely shake the confidence of long positions in the market, sway the overall market long-short expectations, and push the GBP exchange rate into a one-sided trend... is fundamentally still quite unlikely.
In fact, currently, apart from the impact of the news about 'Goldman Sachs' turning from long to short.
Other news in the market is generally still positive, and I hear that the Bank of England has secretly initiated a larger exchange rate market intervention plan. Coupled with the expected referendum results on the 23rd. From the preliminary vote count, it is still biased towards a 'remain' outcome.
I estimate that before the 23rd arrives, the GBP exchange rate trend will still be volatile, and at the very least, it won't easily break below the 1.5000 psychological defense line, which could truly shake the confidence of long positions in the market."
Kong Fansheng responded,
"I agree with Mr. Frederick's statement. When market news is unclear and expectations are not one-sided, the massive long forces accumulated in the market will definitely not surrender easily.
Furthermore, from the perspective of the Bank of England and the British government's interests, unless they truly cannot support the market, they will absolutely not easily give up on the strategy of maintaining the stability of the GBP exchange rate."
Meng Shengfei thought for a moment and said,
"According to what you two are saying... At this position, we still cannot massively increase positions to go fully short, and we cannot further suppress the market to deliver the final blow to the long positions in the market?"
Su Yi said,
"Naturally, we cannot. As the saying goes, a strong arrow at the end of its flight cannot penetrate thin silk. From last night until this morning, the market impact of 'Goldman Sachs'' unexpected shift from long to short has already been reflected in the market trend. At this moment... if our institutions were to collectively go massively short in the market.
In all likelihood, not only would we fail to break through the 1.5000 long psychological barrier in one go. Instead, we would incur an even more furious counterattack from the long forces in the market.
Moreover, with many intraday long position holders in the market having generally executed stop-loss operations, and profitable intraday short position holders also executing profit-taking operations. Although there isn't much on-market capital daring to actively increase long positions.
However, on the market, the potential long power at this moment is by no means weak. If we massively increase our short positions, forcefully suppress the market, but fail to truly and effectively break through the 1.5000 level, then once the GBP exchange rate trend rebounds again, it will put us in an even more passive situation, thereby losing market initiative."
Meng Shengfei asked,
"So, according to your meaning, CEO Su... What is our correct operational strategy currently?"
Su Yi smiled and responded,
"Let's stick to our previous trading strategy: below the 1.5300 level, appropriately cover short positions and retain sufficient reserve funds; above the 1.5300 level, continue to add new short positions, just maintaining the fund's balance in its current dynamic holdings."
Frederick, hearing Su Yi's strategy, was full of admiration, and said with a smile,
"Mr. Su's understanding of the GBP exchange rate trend at this stage is very clear. Indeed, we are not yet at the time to deliver the final blow to the main long positions in the market. Therefore, we must ensure viable capital strength in our dynamic position balance, and utilize the market's violent volatile trend as much as possible to reduce our holding costs, thereby gaining greater market initiative."
"Alright,"
Meng Shengfei nodded with a smile, seeing that the two were in agreement.
And just as Su Yi and Frederick had expected...
As subsequent market trading time progressed.
After reacting to the bearish news of 'Goldman Sachs' turning from long to short, the GBP exchange rate indeed gradually trended upwards under the continuous counterattack of the bulls, recovering the 1.5200 and 1.5250 levels.
Of course, as the GBP exchange rate once again trended upwards with volatility, gradually recovering its intraday losses.
The main short institutions in the market, such as the 'Huayi Chengyuan No. 1' main hedge fund managed by Su Yi, 'Huayin International' Investment Department I and Investment Department II, and 'Aberdeen Asset Evolution No. 1' main hedge fund, had already completed many intraday short position closing and covering operations, further reducing the fund's overall short position holding costs and repatriating more reserve cash flow.
And when the GBP exchange rate regained the 1.5300 level at 4 PM.
The major institutions then began to add new short positions again, replenishing the number of short positions reduced at the morning's low, consistently maintaining the fund's dynamic position balance.
And as they replenished their short positions.
Unknowingly, as the GBP exchange rate returned to the 1.5300 level.
The number of open long positions in the market surprisingly reached a new high, directly breaking through to a massive 4.3 million lots in one fell swoop.
(End of Chapter)