Zhong Yi didn't know that at this moment, Zhong Shi was lying on the bed in a hotel, his mind filled with thoughts of how to make a fortune from the Japanese capital market in September.
On September 22, 1985, the finance ministers and central bank governors of the United States, Japan, West Germany, France, and the United Kingdom held a meeting at the Plaza Hotel in New York. They reached an agreement to jointly intervene in the foreign exchange market to orderly devalue the dollar against major currencies to address the massive U.S. trade deficit. Since this agreement was signed at the Plaza Hotel, it is also known as the "Plaza Accord."
In the severe economic crises that erupted in the 1980s and 1990s, most were triggered by foreign exchange issues. For example, the pound crisis in 1992, the Southeast Asian economic crisis in 1997, and the ruble crisis in 1999. These crises were caused by the mismatch between the economic development and currency value of certain countries, which attracted the attention of bloodthirsty international speculative capital, leading to turmoil in the foreign exchange market and ultimately affecting the economic development of those countries.
With these precedents, countries around the world strengthened the regulation and intervention in the foreign exchange market, ensuring that the economic crises that erupted in the 21st century were no longer primarily currency crises but rather focused on systemic risks and credit systems in the market.
Whether in the foreign exchange market dominated by countries, the bond market dominated by credit ratings, or the stock market dominated by expected profits and future prospects, there are plenty of opportunities to make money. Of course, the risk of loss also exists. In the capital market, there are no invincible generals. Even the "Oracle of Omaha" Warren Buffett has had his share of losses. Therefore, what's important is not how to become rich quickly but how to survive and achieve stable investment returns, which are far more important than volatile gains. In the United States, corporate mutual funds invest in the stock market, buying blue-chip stocks, which provide stable annual returns. When employees reach retirement age, the accumulated retirement funds in the mutual funds are sufficient to ensure a worry-free retirement.
However, if one merely follows the index and harvests steadily, there wouldn't be so many legends!
Especially in the capital market, the myth of becoming rich overnight is far more attractive and revered than stable returns!
The emergence of financial derivatives made all this possible!
Financial derivatives are financial products based on traditional financial products such as currencies, bonds, and stocks, characterized by leveraged credit transactions. Derivatives can be categorized into four types: forwards, futures, options, and swaps. They can also be classified by their underlying assets into stocks, interest rates, exchange rates, and commodities.
Why are derivatives so destructive? For example, if someone buys a futures contract with a 10% margin, and the contract's notional value is 100 yuan, they only need to pay 10 yuan. If the contract's price fluctuates by 1%, it becomes 101/99 yuan. The 1 yuan change represents a 10% fluctuation for the original 10 yuan investment.
In the Chinese stock market of later years, a 10% price fluctuation is the maximum daily limit for a stock. In the futures market, this is just a 1% fluctuation.
Zhong Shi's current funds amount to about three million Hong Kong dollars, which is roughly one million RMB at the official exchange rate and less than one million RMB at the black market rate. Using this amount to play with international giants is like a drop in the ocean, and even in the financial center of Hong Kong, it would barely make a ripple in the stock market.
Therefore, Zhong Shi needs to use financial derivatives to quickly accumulate wealth in the short term.
Through the information collected by Liao Chengde, Zhong Shi learned that there were already yen futures and options in the United States, which undoubtedly brought him one step closer to success.
In Chicago, the third-largest city in the United States, there is the Chicago Mercantile Exchange (CME), the world's largest and most diverse exchange. It hosts most of the yen futures trading, with each contract representing about 125 million yen, and an initial margin of about 300,000 yen. Yen futures are traded in the 1st, 3rd, 4th, 5th, 7th, 9th, 10th, and 12th months.
At the time, 300,000 yen was equivalent to about 9,000 Hong Kong dollars. With Zhong Shi's current assets, he could buy hundreds of yen futures contracts. However, Zhong Shi did not plan to invest all his funds, as even a slight reverse movement in the yen-to-dollar exchange rate could cause significant losses.
The appreciation of the yen after the "Plaza Accord" was a long-term process. In 1986 and 1987, the yen continued to appreciate slowly. The Japanese government would not sit idly by and let the appreciation of its currency severely damage the export economy.
In addition to this reason, Zhong Shi also intended to speculate on two-year yen options.
However, the current issue was not on the other side of the ocean but how to get to Hong Kong in September.
In the 1980s, there were two ways to go to Hong Kong from mainland China. The first was the official route, which was to obtain a tourist visa to Hong Kong. The second was a bit more covert, which was to sneak into Hong Kong.
Although the border troops in eastern Guangdong no longer shot at smugglers, Zhong Shi immediately ruled out this option. The mainland would only develop better in the future, so there was no need to take such risks now.
Since he wouldn't sneak in, he could only go to Hong Kong as a tourist. However, traveling to Hong Kong in those days was not easy. First, one needed relatives in Hong Kong, then foreign exchange vouchers, and only then could one sign up with a travel agency, unlike the convenience of later years.
Of course, there was another method, which was the one-way permit. However, Zhong Shi had not considered this option, as the one-way permit was a one-way trip and difficult to obtain. At this time, the one-way permit had become a means for certain elites to make money, but with Zhong Shi's current connections, he could not reach this group of people who had profited from the "dual-track system."
After touring Nandu for two days, Zhong Shi began to consider his main business.
"Little Stone, what are you doing in Nandu?"
Zhong Jianjun, who was drying his wet hair, walked out of the bathroom and saw Zhong Shi sitting on the bed, lost in thought, not even watching the color TV on the bedside table.
Over the past two days, Zhong Jianjun had followed Zhong Shi to several scenic spots in Nandu. While he enjoyed the sights, he was also very puzzled. It was just some flowers, grass, and old houses; why were so many people coming to see them? Unlike Zhong Shi, who was engrossed, Zhong Jianjun found the scenery pleasant but not particularly exciting after a while.
The day's excursions had left the middle-aged Zhong Jianjun somewhat exhausted. After returning to the hotel, he quickly took a shower. His main entertainment over the past two days had been watching the TV series "The Legend of the Condor Heroes" in the evenings. The 1983 version of "The Legend of the Condor Heroes" was undoubtedly a classic, and the provincial TV station was broadcasting it. Zhong Jianjun was thoroughly engrossed. To him, the TV programs were far more interesting than the day's travels.
After Zhong Jianjun finished his shower, he sat on the bed and started watching TV. He had timed it perfectly, as he came out of the shower just as the TV series began. His earlier question was just a casual inquiry, not a serious one.
He was increasingly unable to understand his son, but this was not a bad thing. It saved him a lot of time and effort in disciplining him. Zhong Jianjun trusted his nephew, who was in university, and decided to let his son and nephew handle things together.
"Father, I have something to tell you. Don't be too surprised, and don't tell anyone else!"
Zhong Shi saw that Zhong Jianjun was lying on the bed, staring intently at the TV. He felt it was time to let his parents know some things, even though they might be hard to believe. Zhong Shi knew that more incredible things would happen in the future, and it was better for his parents to know as soon as possible.
Liu Lan did not come with them this time, saying she would stay at home. No matter how Zhong Jianjun and Zhong Shi tried to persuade her, she refused, so they let her stay.
"Sure, go ahead. Did you get into trouble or something?"
Zhong Jianjun lit a cigarette, took a satisfying puff, and blew out a smoke ring, then said casually. To him, the TV programs were far more engaging than Zhong Shi's words. What could a nine-year-old have to say that was important?
"I sold that white porcelain bowl last time, made a few hundred thousand, and then asked the buyer to buy some stocks in Hong Kong. Now I've made a lot of money!"
As Zhong Shi spoke, he watched his father's reaction, fearing that his father would understand and take back his financial control.
Fortunately, Zhong Jianjun did not fully understand what he was saying and continued to watch TV, asking casually, "Made money? How much? You're more capable than your old man!"
"Not much, just over a million."
"What...?"
Zhong Jianjun was startled, and the cigarette in his hand fell onto the bed, burning a small hole in the white sheet. He quickly picked up the cigarette and extinguished it. After a moment of panic, he calmed down and asked, disbelieving, "Over a million? I didn't hear wrong?"
Seeing Zhong Shi nod, Zhong Jianjun jumped up from the bed, excitedly saying, "Great! We can buy a color TV!"
Seeing his father, who was as excited as a child, Zhong Shi felt helpless. After Zhong Jianjun's excitement subsided, Zhong Shi said, "Father, I was thinking of bringing a TV home this time, but I plan to bring three. Also, I came to Nandu to apply for a tourist visa to Hong Kong."