The Son of Finance of the Great Age

  Chapter 89 Zhongshi's confusion

After ordering three latest Ferraris, Lamborghinis and Maseratis in Italy at a total price of 300 million lire, Zhong Shi deposited 6 million dollars in the Italian Credit Bank, and then rushed to London, the next stop of the European tour, with Andrew .

  London is the capital of England, the largest city and port in Europe, and the largest metropolitan area in Europe. It ranks among the four world-class cities in the world along with New York, Paris, and Tokyo. In addition, London is also one of the largest financial markets in the world. Its financial city has the world's largest foreign exchange market, insurance market, gold market, copper market, etc. It is also a leader in the global market in the fields of derivative over-the-counter trading activities, foreign exchange and financial trade.

Not far to the north of the London landmark Tower Bridge and London Bridge, there is a windowless fortress-like eight-storey building. , the matchbox-shaped London Stock Exchange.

  Not far to the east of the Bank of England and the London Stock Exchange, is the seat of Lloyd's, the organization with the most abundant insurance funds and the highest insurance income in the world, which is the center of the world insurance industry. A little further to the east is the London Financial Exchange, where most of the world's gold, silver, copper and other precious metals are traded. South of the Bank of England, near London Bridge and Cannon Bridge, is the London International Financial Futures and Options Exchange, which is the earliest, largest and third-largest futures and options exchange in Europe.

This is the (old) Financial City of London. In this area called "one square mile", more than 600 banks from all over the world have gathered. It is one of the most capital-intensive places in the world. It is comparable to Wall Street on the other side, and even surpasses it in some respects. (The New Financial City is further east, and it hadn’t emerged in the 1990s.)

  At this time, Zhongshi and Andrew are walking on the Tower Bridge in London. This stone bridge known as the "London Main Gate" has been established for more than a hundred years and is one of London's landmark buildings. What is particularly commendable is that the bridge was originally designed to meet the needs of both shipping and road traffic. When there are 10,000 tons of ships passing by on the Thames, the bridge deck under the tower bridge is separated by the machine in the main tower. , and then folded upwards, and after the ships pass, the bridge body will slowly fall down to resume vehicle traffic.

  Don’t underestimate this design. You must know that the two movable bridge decks each weigh more than 1,000 tons, and the machinery used for lifting in the main tower has been in normal use since the tower bridge was built and has never failed.

  Zhong Shi and Andrew ascended the upper passage for pedestrians through the stairs in the main tower, enjoying the scenery of the upper and lower reaches of the Thames leisurely. The sun was shining brightly at this time, and it was noon. From the upper floor, you could see the towering tall buildings of the Financial City in the distance. Zhong Shi felt a sense of pride and ambition.

  In his previous life, he only stopped in London for a while, and didn't take a very careful tour. This time he came to London with Andrew, which just made up for the regrets of his previous life.

   "Andrew, I heard that you bought an apartment here, is it true?" Zhong Shi asked casually while walking leisurely.

"Ah? Yes, although my main business focus is now in Hong Kong, but London is always my hometown, so..." Andrew is also very excited. He is also returning home with some spare money in his hands, so he is thinking about investing. London real estate.

   "Is it full payment or mortgage?" Zhong Shi asked again.

   "Of course it's a mortgage! Boss, you can't pass me this test, haha." Andrew just smiled. When he was with Zhong Shi, he didn't dare to relax for a moment. For this little boss, he admired him wholeheartedly, and in some places, he was so shrewd that it was outrageous.

  The reason why the mortgage is not paid in full is not because he does not have enough cash, but because he is reluctant to pay the "opportunity cost" incurred in one lump sum.

  The concept of opportunity cost refers to the maximum value in economics that a certain fund is forced to give up when it is used. In other words, the reason why Andrew used the mortgage was to lose some interest, while the "opportunity cost" might be the huge profit lost because the money could not be used in capital operations.

   "Haha, you are smart! As far as you know, what is the situation of the British real estate market?" Zhong Shi smiled slightly and changed the topic.

"It's not very good. The economy of the UK has not developed very well in recent years. It is estimated that except for these people in front of you, everyone else's life is not very easy!" Andrew pointed to the opposite financial city, and his tone unconsciously brought A little sarcasm.

   "Then if the interest rate rises, will it cause the real estate market to decline even more? Come on, let's go to the bar!" After Zhong Shi finished speaking, he took the lead to walk to the bar in the main tower.

  In the main tower of the Tower of London, there are museums, shops and bars. The two of them walked for a long time and felt a little tired. Andrew was still not used to Zhong Shi's cloudy way of speaking, so he could only follow behind with a bewildered head.

   As a result, he entered the bar. Zhong Shi could only order a glass of soda because he was underage, while Andrew drank a large glass of beer. The people sitting in this bar are all young men in well-fitting suits. These people should all work in the financial city to the north and come here to take a break during the noon break.

   "Let me tell you, the recent rumors are not very good. It is said that those consortiums from the United States have already set their sights on the British pound. The foreign exchange trading department of your bank is very busy..."

   Not long after Zhong Shi and Andrew sat down, they heard a man in a Hugo Boss suit next to him talking loudly to his companion. This suit is a German brand, and it is not a standard dress in London. I think this person should come from a German consortium.

   "Andrew, can you tell me about British pounds and foreign exchange?" Zhong Shi listened for a long time, only to feel that the more he listened, the more confused he became, so he couldn't help asking Andrew.

   This is not surprising. In later generations, he became a monk halfway through and did not receive systematic financial training. He is only familiar with the bond market and quantitative arbitrage. The few financial products he knows are nothing more than interest rates and derivatives.

"What? Boss, don't tease me, don't you know this?" Andrew's eyes almost fell off, the beer in his mouth almost spewed out, after a few violent coughs, his face They all turned red. "Boss, do you really want to test me, or are you kidding me?"

   "You don't know, I really don't know much about foreign exchange. If you don't tell me, I'll ask that man, how about it?" Zhong Shi's face straightened, and he couldn't laugh or cry. In Andrew's heart, he knows everything. It's no wonder that if a person who doesn't even know foreign exchange knowledge, how can he be so powerful in the financial market!

   "Don't, don't... Boss, I said it's not okay!" Andrew quickly stopped. He coughed, cleared his throat, and then said solemnly: "Actually, the foreign exchange market is a bit complicated to say the least, but the principle is similar to other financial products. It is basically a comparison between the prices of two countries. .”

"Take this glass of beer for example." Andrew held up the mug of beer in his hand, "This glass of wine may cost fourteen yuan in Hong Kong, but the same quality here may cost one pound, so the currencies of the two places The ratio is one to fourteen."

   "It's that simple?" Zhong Shi was full of disbelief.

"Of course it's not that simple. I'm just making an analogy. In fact, it's not just beer that can be compared, there are many other commodities, basically everything is included. In addition, tariffs, The country's economic strength, inflation rate and other factors can be determined."

   "That's all? After it's settled, can it be maintained forever?" Zhong Shi thought for a long time before asking again.

"Of course not. In a free market economy, the exchange rate fluctuates at any time. After all, the development of different countries is different every day, every quarter, and every year, so these exchange rates are not static." Andrew is really a little Proud, he could see that it seemed that his boss was really not very proficient in the exchange rate system.

   "Then what are these fluctuations?" Zhong Shi asked again.

"It's about appreciation or depreciation. If a country's economic strength fails, its currency will decline accordingly. Foreign exchange dealers in the market will not be willing to hold these currencies, and then they will sell them in the market. This The process of selling is similar to that of stocks, as more people sell, the exchange rate will naturally go down, that is to say, it will depreciate.”

"However, this is not absolute, because the country's central bank is out of economic development and political considerations, and sometimes will not allow the currency to depreciate, so they will take over these currencies in the market and keep the exchange rate at a controllable level. The country’s foreign exchange reserves are for this, because the value of a currency is very important to a country’s imports and exports, especially an island country like the UK.”

   "So that's the case, what if the country's central bank can't support the market's efforts to sell its own currency?" Zhong Shi finally understood what the pound crisis was all about.

   "How is this possible? Is there any institution in the world with such strength that can compete with a country's central bank? Impossible! Impossible!" Andrew laughed and said two impossibilities in a row.

   "Nothing is impossible!" Zhong Shi had a mysterious smile on his face. He drank the soda in front of him in one gulp, snapped his fingers towards the sky, "Waiter, check out!" (Thank you very much for the reward from book friend 0763 Feilong! I hope more book friends can support this book, please Sanjiang Piao, the achievement of this book requires everyone to work together, thank you!)

  (end of this chapter)