Return to 1958 and build a century-old giant

Chapter 921 The Outbreak of the Hong Kong Dollar Crisis

Yang Wendong's time travel brought about tremendous changes to Hong Kong's history. In the 1960s and 70s, countless people and events were altered by his existence.

However, some trends are irreversible, such as the rise of the real estate market and the financial industry, and the decline of Hong Kong's industry and manufacturing sector. Yang Wendong has no intention of forcibly changing these two directions, as it is almost impossible to succeed and is an inevitable trend.
However, the entertainment industry is not necessarily the case. He feels that he still has some opportunities. His early investments in overseas cinemas and future investments in film studios and cinemas in mainland China can guarantee that Hong Kong films will have a stable market for revenue in the future. As long as there is a market, then all problems are not problems.
Once Hong Kong's entertainment industry is protected, the entire industry chain can create tens of thousands of jobs. Unlike physical factories, it doesn't need to worry too much about labor costs, which will bring more indirect benefits. In addition, there is also the export of culture.

Of course, if we can't compete with the mainland's local entertainment industry in the future, then we can only accept defeat and there's nothing we can do about it.

Forcibly protecting a failing industry is meaningless. In any case, whether it's Southeast Asian cinemas or future mainland cinemas, whether it's mainland, Hong Kong, or Hollywood movies, he can sit back and relax. And the real estate revenue generated by these cinemas can be dozens or even hundreds of times higher.
However, his changes only involve business; politically, they are basically unaffected. Although he may have some ability to change politics, he will not actively participate in these matters.

The Sino-British rivalry that has lasted for more than half a year has drawn many businessmen into the fray, with each taking sides and various media outlets arguing endlessly about it.

During this process, a large number of people began to immigrate, or, for insurance purposes, cash out in US dollars. After all, unless they were time travelers, who could guarantee that something like this wouldn't happen?
Even those businessmen who openly align themselves with the mainland will have a backup plan, such as having one of their children obtain another nationality or cashing out some Hong Kong dollars and leaving.

In the short term, the Hong Kong and British governments were pleased with this and used it as a pretext to negotiate with the mainland. However, as time went on, they discovered a problem: their holdings of US dollars were insufficient.
Just like commercial banks, a government's foreign exchange reserves, no matter how large, are not enough for a large number of its own employees to exchange. Once a large number of people exchange them, it will inevitably lead to a rapid shrinkage of foreign exchange reserves. Not to mention Hong Kong, even Japan and Germany, which are currently at their peak, cannot withstand this.

Hong Kong has always adopted a free exchange system, which is a normal strategy in many regions and one of the foundations for maintaining international free trade.

Any Hong Kong resident can take Hong Kong dollars to HSBC, the "quasi-central bank," to exchange them for common currencies such as US dollars, British pounds, and Japanese yen. HSBC and the Hong Kong government will also make preparations.

Of course, large sums of money still need to go through some procedures, but as long as the source of funds is legal and there is no illegal activity such as money laundering, there is no major problem. Yang Wendong arranged to cash out his funds into US dollars, which was done step by step by taking advantage of this policy.

Under normal circumstances, most people in a region do not need foreign exchange. They consume within the region and only need to use their own currency. However, once a crisis of trust occurs, a large number of people will go to exchange for foreign currency, and then everything will be over.

Historically, although the Asian financial crisis was launched by hedge funds led by Soros, the actual cause of the currency collapse in various Asian countries was their own citizens. They did not trust their own currencies and, for the sake of security, they all rushed to exchange them for US dollars, thus falling into the trap set by American hedge funds.

At the beginning of this year, the Hong Kong government discovered the potential risks and began to impose restrictions, but not as completely as it had in the mainland in the previous life. This is unacceptable because Hong Kong society is known as an "absolutely free market." If foreign exchange is restricted, Hong Kong's operations in the global market over the past few decades will completely collapse.

As a result, although the Hong Kong government plugged some of the flood dikes, it did not completely seal them off. The loopholes left behind were exploited by a large number of scalpers and gangs, who then frantically cashed out foreign currency and sold it at high prices to those who needed it.

The Hong Kong government, of course, did not hold back and enacted new laws to restrict scalpers and even arrested some. However, faced with absolute profits, some people were willing to traffic drugs, let alone those who only engaged in buying and selling drugs and were subject to lighter penalties. As a result, the Hong Kong government's foreign exchange reserves continued to decrease.
Perhaps believing that the Sino-British negotiations would not drag on for too long, the Hong Kong government never took drastic measures to restrict foreign exchange. However, the negotiations remained deadlocked. As a result, by August, the Hong Kong government's foreign exchange reserves could not hold up. If they continued to hold on, the loss of foreign exchange would be even more disastrous, and the Hong Kong dollar might become worthless.
Ultimately, the Hong Kong government was forced to take drastic measures, allowing only three HSBC branches to exchange foreign currency, with each person limited to exchanging only US$200 per day. HSBC also slowed down the exchange process significantly to conserve foreign exchange reserves, but also to avoid giving the impression that the Hong Kong government was completely refusing to allow exchanges.

However, Hong Kong citizens are not fools, and those who speculate on foreign exchange are even more shrewd. In a short time, the exchange rate of Hong Kong dollars on the black market plummeted, and US dollars became a hot commodity. This, in turn, made the people who were originally watching and waiting nervous and rushed to exchange for US dollars, which further aggravated the panic.

Hong Kong, Connaught Building:
After reading the newspaper in his hand, Yang Wendong said, "Just as we expected, the Sino-British negotiations have dragged on for too long, which will inevitably lead to more and more people immigrating and settling foreign exchange, eventually dragging down the Hong Kong government's foreign exchange reserves."

“In the past ten years or so, Hong Kong’s industrial exports were very strong, and its per capita foreign exchange reserves were among the highest in the world. But unexpectedly, in less than a year, its foreign exchange reserves have run out.” Fang Xianming nodded and said, “Sure enough, no financial institution can withstand a run on its banks, no matter how well it does.”

Yang Wendong said, "Yes, there's no way to deal with this kind of thing. The Hong Kong government's actions weren't wrong, but there's just nothing we can do."

The South American economic crisis of the 80s and the Asian financial crisis of the 90s were too much for so many countries to withstand.

Hong Kong's economy wasn't in any real trouble before, but the uncertainty about the future triggered panic and led to a financial crisis, which is somewhat similar to the Hang Seng Bank crisis back then.

Fang Xianming asked, "Mr. Yang, the Hong Kong dollar exchange rate has already fallen to 7 on the black market, and it still has a downward trend. When should we make our move?"

Although the Changxing Group is confident about the future of Hong Kong, it also knows that countless Hong Kong people are not. So it has made preparations. On the one hand, it has converted the Hong Kong dollars it had previously held into US dollars. On the other hand, it has prepared other US dollar funds. In addition, in case of emergency, it can use some high-quality overseas assets as collateral to obtain US dollars from overseas banks.
Everything is for the purpose of buying at the bottom. Since so many people have no confidence in Hong Kong's future, we can only do as they please.

“We’ll hold off for now. The black market is so small; it’s not appropriate for us to get involved. If we’re going to get involved, we have to do it openly and honestly,” Yang Wendong said with a smile and a shake of his head.

Fang Xianming asked, "Does Mr. Yang mean to have Hang Seng Bank handle this?"

“We do have that plan, but we don’t need to take the initiative,” Yang Wendong said. “We’ll wait until the Hong Kong government can’t hold on any longer, then we’ll release the news that we have US dollars in our hands. They will naturally come to us, and then they will owe me a favor.”

This time, we need to make money and build relationships. The Hong Kong government is, after all, a government, and their connections still play a significant role.
Fang Xianming said, "Okay, I'll release the news that we're preparing for a large-scale overseas investment." "Okay, that's settled then. Anyway, we're not the ones in a rush," Yang Wendong nodded.

Historically, this Hong Kong dollar crisis caused the Hong Kong government considerable embarrassment, and it ultimately had to seek negotiations with the mainland and British governments to stabilize the Hong Kong dollar, which then fell from around 5 to 7.8.

It is still unknown what agreements were reached between the three governments during this process.

Even if you do nothing, you can earn 50% in the future. If you wait for an opportunity to do something, it is possible to double your income.

Another half month passed quickly, and the Hong Kong dollar crisis became increasingly serious.
At the entrance of HSBC, the queue of people blocked several streets. Many people waited all day but could not exchange their money. Many were very panicked and anxious, and there were even several fights in the queue.

On the other hand, on the black market, the exchange rate of Hong Kong dollars to US dollars has reached 9:1, but sometimes there is still no market for it.

Some merchants even refused to accept Hong Kong dollars, only accepting foreign currencies such as British pounds and US dollars. When this was publicized, it caused even more panic.
The Hong Kong government immediately sealed off these shops and declared that in Hong Kong, no business can refuse transactions in Hong Kong dollars; otherwise, it would be illegal.
However, no matter how it is handled, the fundamental problem is the lack of foreign exchange. Too many people are unable to exchange their currency, which has made even those who didn't originally intend to exchange their currency anxious. They are also afraid that the Hong Kong dollars in their hands will depreciate sharply overnight, which further exacerbates the panic.

"Have prices in Hong Kong risen sharply recently?" Yang Wendong frowned as he looked at his subordinate's report.
Carrefour's Liu Huayu replied: "Yes, Mr. Yang, a large amount of goods in Hong Kong are imported from overseas. With the current situation of the Hong Kong dollar, many importers are unwilling to accept Hong Kong dollars."

They also have a lot of trouble exchanging Hong Kong dollars, and sometimes they even lose money. On our side, the process of applying for US dollars from HSBC for normal trade is also very slow. Carrefour has some US dollars on hand because it has businesses overseas, but other merchants do not. Some merchants have therefore begun to reduce or even stop importing.

Furthermore, in this situation, my large-scale advance payment in US dollars is itself a loss, so the price must be increased to offset this loss.

"Hmm, it seems that prices will soon be a problem as well," Yang Wendong nodded and said.
In today's era dominated by the US dollar, the dollar is of paramount importance to countries and regions that need to import large quantities of goods.
Without foreign exchange, the internal economy is very likely to collapse immediately;
The US uses the dollar's fluctuations to exploit certain countries, employing similar tactics.

Liu Huayu said, "Yes, that's not all. Now many people can't exchange their Hong Kong dollars for foreign currency, so they've started hoarding gold. Many gold shops have been forced to close down because they can't buy gold anymore. This hoarding trend will probably soon spread to the daily necessities sector."

“If that’s the case, Carrefour will be greatly affected.” Yang Wendong thought for a moment and asked, “What are you planning to do?”

A real estate crisis usually only affects land prices and the financial market, but now that the foreign exchange market is in trouble, the impact is even greater.
Liu Huayu said: "I plan to continue operating normally for the time being. As the largest supermarket in Hong Kong, if Carrefour has a problem, the panic it causes will be more serious, and we will eventually be unable to control it."

However, I also plan to restrict some products to prevent people from panicking and hoarding goods indiscriminately.

"Yes, let's impose some restrictions, but maintain normal operations," Yang Wendong agreed.

The panicked state of citizens is beyond the comprehension of normal psychology. For example, in my previous life in mainland China, many people hoarded hundreds of kilograms of salt.
September 10th arrived quickly. The Hong Kong dollar crisis continued, and on the black market, the exchange rate of Hong Kong dollars to US dollars had reached as high as 10:1. More and more people joined in, and the entrances of several HSBC banks were almost blocked.

Hong Kong's import and export trade has also been greatly affected by the lack of foreign exchange, even the Cheung Hing Group.

On that day, Yang Wendong also received a call from the Governor's House: "Mr. Yang, the Governor invites you to come to the Governor's House the day after tomorrow to discuss important matters."

"Okay." Yang Wendong readily agreed, then asked, "Am I the only one here?"

The other party replied, "And Mr. Sir Michael Sandberg of HSBC."

“Okay, I’ll be on time,” Yang Wendong said.
After hanging up the phone, Fang Xianming, who was next to him, laughed and said, "It seems that our plan has succeeded. The Hong Kong government urgently needs US dollars. Looking at the whole of Hong Kong, only our group can help the Hong Kong government. Even Jardine Matheson and Swire combined are far inferior to us in terms of US dollar foreign exchange."

"Yes, that's what we expected, but it's not absolute. If the Hong Kong government seeks help from the British government, it's not impossible to solve the problem," Yang Wendong said.
Fang Xianming said, "Although Britain has declined, it does have the ability to solve this problem for Hong Kong, but they will not do so unconditionally; there will inevitably be a considerable price to pay."

"Haha, we're pretty much the same, except I only require pure economic returns." Yang Wendong smiled and said, "Prepare the documents. In a couple of days, I'll go and meet this new governor of Hong Kong."

PS: Please give me a monthly ticket
(End of this chapter)