Since it was impossible to crush the confidence of the bulls in the market in one fell swoop, they could only go with the flow.
Otherwise, with the bulls' desperate counterattack, when the pound exchange rate quickly rebounded, their newly added short positions would all fall into a state of loss.
This would not only heavily deplete their reserve cash.
It would also cause them to lose their current market initiative and fall into an obviously passive position.
After speaking, Su Yi immediately instructed Qu Zecai to have the traders in the trading room begin closing out their newly added intraday short positions for profit-taking, harvesting the modest intraday profits, and retrieving funds to replenish the fund account's margin.
At the same time, as Su Yi had the traders perform closing operations.
Huayin International Investment Department One, Investment Department Two, and Aberdeen Asset Evolution No. 1 Main Hedge Fund Trading Department.
Each major institution began to close out newly added intraday short positions for profit-taking.
As these major short-selling institutions in the market covered their positions and closed out newly added intraday short positions, the pound exchange rate also underwent dramatic synchronous changes.
The pound exchange rate, as short forces in the market covered their positions, while long forces continuously increased their holdings, and a group of intraday speculators and investors followed suit... rapidly rebounded near the 1.5200 mark, continuing to rise.
In less than an hour, it rebounded by over 50 points from its intraday low, recovering the 1.5250 mark.
"I thought the main short sellers in the market would concentrate their efforts to break through the 1.5200 mark, further stimulating short sentiment in the market, hitting bull confidence, and thus continuing to trigger a 'longs killing longs' situation on the market. I didn't expect... them to just give up like that."
Noticing the significant rebound in the pound exchange rate, at 5 PM during the European trading session in London, Andrea, the fund manager at UBS International Andrea Hedge Fund trading room, said with some surprise,
"It seems this short-selling force, led by 'Chinese-funded institutions,' is just bluffing."
"This short-selling force active during the Asian session, in my opinion, cannot determine the final direction of the pound exchange rate, nor should it be our primary focus,"
said Enid, Head of Market Analysis at Andrea Hedge Fund.
"In the current situation, the US trading session is the most dangerous time."
Due to the weekend negotiation meeting, the expected positive news was not revealed.
In today's market.
A host of core capital institutions on Wall Street, such as BNY Mellon, Blackstone Group, and Citibank, have all clearly shifted from long to short.
Compared to the financial strength of Huayin International, Huayi Capital, and the Aberdeen Asset Evolution No. 1 fund.
These major short sellers on Wall Street are the true behemoths.
If these giant capital institutions massively short the pound exchange rate at the current position, while also overlaying some negative market news.
The 1.5200 mark for the pound exchange rate is still relatively dangerous today."
"Although the weekend negotiation meeting didn't yield the results everyone wanted, the most crucial influencing factor for the recent trend of the pound exchange rate is still the referendum result on the 23rd,"
Andrea said with a smile.
"This afternoon, the preliminary vote count for London should be out by now, right? I think... if nothing unexpected happens, this will provide a significant boost to market bullish sentiment."
As she spoke...
Evangeline, Andrea Hedge Fund's market intelligence officer, had knocked and entered the trading room.
"Are the preliminary vote counts for London out?"
Andrea asked, smiling as she looked at Evangeline.
Evangeline nodded and said,
"According to the latest market news, the preliminary vote count for the national referendum on June 23rd, which is Thursday, has been released."
"What's the result?"
Andrea asked urgently.
Evangeline happily replied,
"After the preliminary vote count, the number of votes in core cities like London, Manchester, Liverpool, Sheffield... supporting remaining in the EU all exceeded 50%. Among them, London's votes for remaining in the EU surpassed 60%, reaching 60.75%, which is largely in line with market expectations."
"Excellent!" Andrea praised.
"However..."
Evangeline paused, then continued,
"Excluding many regions for which vote counts are not yet available, among the core cities in regions where preliminary results have been disclosed, the voting results in Scottish cities like Edinburgh and Glasgow are not very ideal. The preliminary vote count in favor of remaining in the EU is only about 49.5%."
"This round of Brexit referendum was originally instigated by the Scottish region,"
Andrea said.
"The less-than-ideal preliminary vote counts in cities like Edinburgh and Glasgow are within expectations. According to these preliminary results... comprehensive statistical calculations suggest that the probability of remaining in the EU should be over 90%, right?"
Evangeline replied,
"It's hard to say, after all, there are still many regions, especially non-core cities, as well as peripheral and remote areas, where the vote counts still have enormous uncertainty. Furthermore, to ensure the fairness and transparency of the referendum, since all vote counting data and results will only be compiled on the 23rd, the possibility of an unexpected outcome always remains."
"As long as London's preliminary vote count is above 60%, I think it's largely unlikely for the referendum result to be unexpected,"
said Enid, Head of Market Analysis.
"After all, the total voting result is aggregated by population, and while voting results from other regions will always differ, the difference won't be more than 10%."
"Hmm, I think so too,"
Andrea nodded.
"Currently, the biggest variable is still the Scottish region,"
Evangeline said.
"The major island groups in Scotland, as well as its peripheral and remote areas, caused such a stir recently, coupled with their previous attempts to hold an independence referendum. It's estimated that the voting results will not be optimistic, and the final vote count will likely not be available until the morning of the 23rd, which gives market expectations considerable uncertainty."
"It seems the final showdown between bulls and bears will have to wait until the referendum day,"
Andrea sighed softly.
"But looking at the market trend at this moment..."
Enid glanced at the large screen in the trading room, noticing the continuously soaring pound exchange rate, and said with a smile,
"The market's feedback is quite positive, which means people believe that based on the preliminary vote counts, it's still a clear positive for the pound exchange rate trend."
"However, relying solely on this bit of positive news and the shift in expectations is far from enough to completely suppress the main short sellers in the market, or even to change the long-short expectations and strategies of the major short-selling institutions. But, being able to maintain market initiative amidst continuous news developments is still quite good."
Andrea said.
Saying this, she began addressing several major trading groups in the trading room.
To continue following up by increasing long positions, expanding the fund's long positions, and inducing bullish sentiment in the pound exchange rate market to surge further.
And at the moment when UBS International Andrea Hedge Fund continued to increase its long positions.
At Barclays Bank Foreign Exchange Trading Center in London, Lion International Hedge Fund Trading Department.
Fund manager Claude, who had originally exited the pound exchange rate trading market and closed all long positions, saw the compiled preliminary vote count.
His eyelid twitched, and he distinctly felt something was amiss.
After pondering for a while, he asked Alex, the head of the fund's market research department,
"What do you make of this preliminary voting result?"
Alex replied,
"It looks entirely in line with market expectations; there's nothing beyond expectation, and nothing unexpected has happened. With this preliminary voting result... it's estimated that in the pound exchange rate market, both bulls and bears will have to continue to stalemate until the news and market expectations become clearer."
"I, however, feel that this preliminary voting result leans notably towards the bearish side,"
Claude sighed softly, saying,
"Currently in the market, everyone's expectations for the pound exchange rate trend and the June 23rd referendum result are overly optimistic.
When expectations are too high, if even a small surprise occurs in an expected outcome, it can easily lead to a stampede among the market's bulls, and also cause a positive event to turn negative immediately after it materializes.
If market investor expectations are too high, and the market news results do not exceed expectations. Then the final feedback is very likely to fall short of expectations.
Fortunately, the central bank has recently continued its open market operations, providing a certain degree of support for the upward trend of the pound exchange rate. Otherwise... this market trend would still be quite dangerous!"
"Do you think... there will be a surprise?"
Alex asked.
Claude thought for a moment and replied,
"Currently, less than half of the regions and cities have preliminary vote counts, so an unexpected result... it's hard to say. At least at this position, if I were to choose, the probability of a successful long position is likely already lower than that of a successful short position, and this is probably why many Wall Street institutions have begun to shift from long to short."
Alex smiled and said,
"So... are we not going to gamble? No matter what, such a massive accumulation of long and short positions in the market is bound to trigger extreme market movements. If we bet in the right direction, with one side experiencing a stop-loss stampede, the profits would still be very substantial."
Claude waved his hand and said,
"Forget it. My luck with gambling has always been bad; it's better to just watch the show."
"I heard that Huifeng and UBS are both aggressively increasing their long positions. Now, throughout the pound exchange rate market, the long and short bets are getting bigger and bigger."
Alex said.
"It's not just these two institutions. Our central bank is also bullish on the market."
Claude said.
Alex nodded and said with a smile,
"Indeed, it feels like this Brexit referendum and the long-short battle in the currency market will have a profound impact on our country's future destiny!"
"The impact is indeed profound. For our country, this is actually both a crisis and an opportunity."
Claude said.
"How so?"
Alex asked.
Claude smiled and said,
"In the current pound exchange rate market, the number of short positions has reached a scale of 3 million, hasn't it?"
"It's over 3 million lots,"
Alex said.
"3 million lots, calculated by standard contract market value, is approximately 300 billion US dollars. With such a massive number of short positions, once short sellers stampede and bulls squeeze them to the limit, if the pound exchange rate fluctuates downwards by 3000 points, it means at least over 100 billion US dollars will be harvested.
You say, if the government and the central bank were to deliberately set a trap to harvest this batch of short capital.
Would the losses of this short capital, led by Chinese and Wall Street capital, flowing into our country, not bring a greater boost to our economy? Isn't this a huge opportunity?"
Claude said.
"But the referendum result is non-deterministic. How can it be controlled?"
Alex said.
Claude said,
"As long as there are enough related interests, and many people in important government positions are inclined to do so, what's so difficult about controlling the outcome?"
And just as Claude had secretly guessed and calculated.
At this moment, within the Bank of England, the UK's central bank institution, and the National Treasury, analysts had already identified a prime opportunity in the pound exchange rate market to hunt down massive short capital.
They proposed an operational plan to the central bank's leadership and key officials of the Treasury to use the referendum to harvest market short capital and enrich national wealth.
"This is indeed a huge opportunity."
Andrew, the UK Treasury Secretary, reviewed the 'Snipe Short Capital' plan proposed by his subordinates and exclaimed.
"If we could determine the referendum result in advance, executing this plan would not be impossible,"
replied Brian, the Governor of the Bank of England and head of the national central bank, upon hearing Andrew's exclamation.
"However, for now, the June 23rd referendum result should still be uncertain, right?"
Andrew smiled and said,
"In the face of national interest, the referendum result is still negotiable. The key is, if we expand the long-short war on the pound exchange rate, do you have a chance of winning? Although 'Chinese capital' might be a soft target in the financial market, Wall Street capital is a pack of wolves."
"If the referendum result is certain, then naturally we have a chance of winning. However, our central bank cannot directly intervene in the foreign exchange market; it can only be the investment departments of various financial institutions participating in market speculation. But this is not a problem; we can inject capital behind the scenes. The key is still what the June 23rd referendum result will be?"
Brian said.
"The current vote counts aren't out yet. Tomorrow I'll go meet with the Prime Minister to inquire. The main uncertainty regarding the vote count is still in the Scottish region."
Andrew said.
"Yes, that's something everyone can anticipate. I heard that Scotland's current First Minister, Salmond, is not easy to deal with, and I also heard that he has been inciting Scottish independence. Crucially, this fellow is also a Member of Parliament. If we want to control the vote count, he will be the biggest obstacle."
Brian said.
Andrew rubbing his temple and said,
"Salmond is indeed an old stubborn one. But dealing with him is not something we should be concerned with; there are the people in Parliament for that. Moreover, this plan to snipe short capital is not up to the two of us; ultimately, the Prime Minister must make the decision."
"Alright. Then we'll await the Prime Minister's good news."
Brian said.
Having finished speaking, Brian stood up and walked out of the Chancellor of the Exchequer's office.
Meanwhile, in the pound exchange rate market, stimulated by the latest news, the bulls had gained complete initiative.
The pound exchange rate surged rapidly, having already rebounded to near the 1.5300 mark.
At the same time, net long positions in the market, aided by continuous position increases from long capital and countless market speculators following suit, also climbed back to a scale of 800,000 lots.
However, although the pound exchange rate, after continuous violent fluctuations, returned to near the 1.5300 mark.
But the overall loss amount for the short positions held by major short-selling institutions like Huayi Capital, Huayin International, and Aberdeen Asset Evolution No. 1, after covering and closing out a number of intraday short positions, was significantly lower than the last time the pound exchange rate was at the 1.5300 mark.
In other words...
Despite the rapid rebound of the pound exchange rate and the strong counterattack from bullish capital in the market.
They still firmly held the market initiative, unafraid of the continuous short squeeze and fierce counterattack from the bulls in the market.
(End of Chapter)