Rebirth of the Financial Overlord

finished.

Shen Jiannan started to taste the free coffee, and Charlie Cao immediately took out the contract he had prepared and handed it to the HSBC team.

There are five copies in total, one for each person.

The HSBC group looked at each other with a suppressed smile on their faces, and they had to grit their teeth and restrain themselves.

This is well prepared.

How arrogant and defiant it would take to be so stupid.

The market has already proved an idiom.

The strong are always strong.

Thailand came from behind to stand out from the four tigers and ranked first. Thanks to the opening of the Bank of Thailand to the financial market, it will attract capital from all over the world to Thailand like a magnet.

With the influx of countless capitals, it is impossible for Thai real estate to fall even if they want to.

stupid?

From the perspective of HSBC, this is indeed a very stupid investment, and from the perspective of Shen Jiannan, this is also a very stupid investment. In other words, anyone who is proficient in economics, finance, and trading, etc., will feel that this is a very stupid investment.

Whether it is securities, futures, resources, etc., there will be a certain pattern in the rise and fall of its price.

This pattern can be called a trend.

The formation of a trend is caused by a combination of various reasons. It can be said to be the general trend, or it can be said to be the inevitable result of the game competition of various comprehensive factors.

Just like countless small rivers flowing into a big river, the roar of the big river can hardly be resisted.

Simply put, the formation of a trend does not happen in a day.

In the same way, when a trend comes to an end, it will not collapse in a day.

In terms of probability and statistics.

in an uptrend.

The probability of reaching the highest level is very low.

Calculated based on 365 days per year, then there is only one highest in this year. If statistics are used for ten years, then the probability is 1 in 3650.

The real estate industry has a cycle of several decades, so the probability of the price becoming the highest is one in tens of thousands.

This is one of the simplest logic math problems.

But because of the simplicity.

It is as simple as the securities market, the futures market, or the material and real estate markets.

There will always be people who think they can sell the highest or buy the lowest.

Every year, every day.

In a falling market, there will always be countless smart people who choose to buy the bottom, and in a rising market, there will always be countless smart people who choose to short sell.

Human beings are smart in that they like to complicate simple things.

In this regard, Cohen Meriwether has seen too much.

If you are reluctant to bear meat, you will not be able to catch wolves.

Shen Jiannan was well aware of Meriwether's thoughts.

Which of these bankers is not as cunning as a fox, if these guys think he is smart, then he can go out now.

No one will do a business that they know will lose money.

The senior management of HSBC is all financial elites with professional backgrounds. After reading it back and forth several times, they quickly figured out what the contract presented by Capital One was.

This is a gambling agreement.

It is very close to the credit default swap in the U.S. real estate bond market, but it is different from the credit default swap in the U.S. real estate market with the bond asset price as the underlying object.

Taking well-known real estate in many cities in Thailand as the target, the weighted average valuation is adopted, and the calculation unit is the international common currency US dollar.

When the weighted average index of housing prices continues to rise, Capital One must pay HSBC a monthly premium (deposit.)

When the housing composite index continues to fall, the bank pays Capital One insurance premiums.

It is somewhat similar to an insurance contract for property preservation.

For example, help a friend to buy a life insurance or vehicle insurance, but the beneficiary is the policyholder.

But not quite.

For conventional life or property insurance contracts, the maximum amount of compensation is calculated based on the payment amount of the policyholder and the insurance period. If an accident occurs to the insured person or assets in the middle of the contract, the insurance company will pay compensation according to the terms of the contract.

But if there is no accident in the middle of the insurance bid, then the annual premium of the policyholder will be paid in vain.

It can be said that in a conventional policy, the insured or the asset is the subject matter.

After the performance of the contract is completed, no matter how much premium the policyholder has paid, as long as the insured object has no accidental loss in the contract, the premium will be fully owned by the insurance company.

It is also somewhat similar to securities, futures, and foreign exchange option contracts, and the subject matter is nothing more than the Thai real estate market.

Through this contract, there is no need for an agreement associated with the physical object, so that the transaction quantity between the buyer and the seller can be infinitely multiplied without the amount of the physical object.

The contract text given by Capital One is equivalent to buying a weighted option contract for value-preserving insurance for real estate investment in Thailand.

If home values ​​go up, Capital One's insurance premiums are for naught. Capital One benefits only when home values ​​decline.

This contract is similar to an insurance contract in that the bank undertakes the performance duties similar to that of an insurance company.

The insurance payout ratio is one of the important parameters in an insurance policy.

The contract text given by Capital One naturally also has this kind of compensation ratio parameter.

For a contract with an underlying compensation value of US$100 million, Capital One needs to pay an annual premium of 1%.

In other words, if Capital One buys a credit default swap with a maximum payout value of US$100 million, it needs to pay an annual premium of US$1 million. If the price of the house goes up or is higher than it was worth when he bought the contract, then Capital One will lose $1 million for nothing.

Capital One can get compensation from HSBC only when the price of the house is lower than the value of the underlying purchase.

The compensation amount is calculated based on the loss value of the property insured by Capital One.

For example, according to statistics, the average price of real estate in Bangkok is US$1,000 per square meter.

So as long as the weighted value of the property in Thailand is higher than or equal to US$1,000, Capital One will lose US$1 million if it buys a credit default swap of US$1 million.

Only when the average property price in Thailand is less than US$1,000 can Capital One receive compensation from Standard Chartered.

The amount of compensation depends on the actual price of the comprehensive weighted price of Thailand's real estate when Capital One redeems the contract or when the option contract expires.

If it is US$990, Capital One can obtain the compensation amount from Standard Chartered. The lower the price, the greater the compensation amount from HSBC.

The payout amount is calculated as ten dollars multiplied by five hundred percent.

Putting down the document in his hand, Cohen Meriwether rubbed his nose. He couldn't help it. He was worried that he would laugh out loud. It would be bad if he scared the fat sheep in front of him away.

After kneading several times in a row, Cohen Meriwether finally restrained the urge to laugh, he looked at Shen Jiannan sincerely and said.

"Shen, as a friend, please forgive me, this is really a very stupid investment."

No loss is a top banker.

Shen Jiannan raised his eyebrows lightly. He can still be so hypocritical at this time. No wonder this guy is in charge of HSBC.

What expressions will these guys have in the future?

Shen Jiannan also suddenly wanted to laugh.

Fortunately, this guy has a strong control.

He straightened his whole face, feeling like he wanted to twitch, and said.

"I'm only concerned about your bank's solvency when the Thai real estate index falls, yes. I'm worried that your bank won't have the money to compensate me."

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