Chapter 1364: Returns on investments in various countries

Following the trend of the previous life, on September 22, 1985, the finance ministers and central bank governors of the United States, the island country, West Germany, France, and the United Kingdom met at the Plaza Hotel in New York City and decided that the five governments would jointly intervene in the foreign exchange market to cause the dollar to fall in an orderly manner against major currencies in order to solve the United States' huge trade deficit.

This time, Xia Yu couldn't guarantee that there would be any changes.

However, if he wanted to interfere with the signing time of the agreement, it would indeed be a breeze.

Apart from West Germany, he could influence the other four countries, and a mere matter of timing was nothing.

Even if he didn't interfere.

It was already early August, and there were still more than 40 days left for him to act.

Although the time was a bit tight, it was enough!

The key now was how to maximise the benefits from this opportunity, not only financial benefits, but also the interests of the consortium's layout, and the premise must be as safe as possible.

This brought him to the specific situation of the Plaza Accord.

The reason for the Plaza Accord was the continued deterioration of the US trade situation. The foreign trade deficit was as high as 150 billion US dollars, and for the first time since 1914, the US had gone from being a creditor country to a net debtor country.

Of course, the reason why the US wanted to devalue the dollar was that although its trade situation continued to deteriorate, its overall economic situation had improved.

In the past four years, Reagan's first term in office had reversed the trend of the US economy and laid a certain foundation.

These four years can also be described as a period of transition, from a period of low productivity growth to a period of high productivity growth.

From a period of high inflation and interest rates to a period of much lower inflation and interest rates.

From a period of 'many problems' in the economy to a period of opportunities.

Of course, the UK, France, West Germany and the island countries were happy to go to the US to sign the Plaza Accord together and interfere with the US dollar exchange rate because they also thought it was profitable.

Between 1980 and 1984, when Alan Greenspan was chairman of the Federal Reserve, the US raised interest rates continuously, with short-term interest rates rising from the previous near-zero cost to 5%.

High interest rates attracted a large amount of overseas capital to flow into the US, causing the US dollar to soar. From the end of 1979 to the end of 1984, the US dollar exchange rate rose by nearly 60%, and the exchange rate of the US dollar against major industrial countries exceeded the level reached before the collapse of the Bretton Woods system.

So this time, the devaluation of the US dollar was a way to relieve the pressure on the US dollar.

The result of this relief was that it was hoped that the production costs of American products would be relatively reduced, stimulating American exports and easing the trade deficit.

For the UK, France, West Germany and the island countries, the outflow of large amounts of capital from the US into their countries would also stimulate the domestic economy, such as investment. Although the appreciation of their own currencies against the US dollar would affect their exports, as long as it was kept within a certain range, they would still be competitive.

There are risks, but the benefits are also significant. This is the fundamental reason why the other four countries were willing to sign the Plaza Accord.

The depreciation of the US dollar is certain, and the gross national product of each country calculated in US dollars will soar this year and next year, and in some countries it will even rise by as much as 40%.

Therefore, for Xia Yu's business empire, his huge amount of US dollar funds must find a way to avoid the crisis of depreciation, and take advantage of this opportunity to make a leap in his wealth.

Once the US dollar depreciates, major currencies such as the Japanese yen, West German mark, French franc, Italian lira, Canadian dollar, Australian dollar, and Spanish peseta will appreciate to varying degrees.

As for the extent of the appreciation, according to the situation in the previous life, starting from the signing of the Plaza Accord in September 1985, it continued until 1987. Apart from the Japanese yen, the currency that appreciated the most was the West German mark, up 70.5%.

Then came the appreciation of the French franc by 50.8%, the Italian lira by 46.7%, the British pound by 37.2%, the Canadian dollar by nearly 11%...

And the biggest appreciation was the Japanese yen.

After getting out of control, the yen appreciated by nearly 86.1% against the US dollar!

So it is definitely a wise choice to speculate in the currencies of these countries, but it is only at the most superficial level, with the least technical content, and without maximising profits.

The best approach is to combine it with the stock markets of various countries.

For example, the UK stock market has been booming since Margaret Thatcher came to power. The FTSE is currently at over 800 points. In the long term, it is expected to rise to over 1,400 points by 1987, before dropping again.

So if you invest 100 million US dollars in pounds now, invest it in the stock market, and then convert it back to US dollars before the UK stock market crashes, then 100 million US dollars will become 240 million US dollars.

The actual asset increase would be 140%!

And West Germany?

Before March last year, before the West German stock market reached 800 points, Guangming Fund invested massively in the West German stock market. Now the West German stock market has almost doubled, and according to Xia Yu's judgment, the highest point will be around 1600 points.

Then from now until most of 1987, it will remain stable, with no significant ups or downs. By the end of 1987, it will even plummet back to the level before last year's rise.

So if you take out $100 million and convert it into West German marks now, and then convert it back into US dollars and withdraw it at the end of 1987 before the stock market crashes, it will only be $170 million.

An increase of only 70%!

Only half of the investment in the UK!

And just from the exchange rate, the West German mark actually appreciated by almost twice the pound sterling!

Of course, the most terrifying would be the island country.

The yen would appreciate by 86.1%, and the Nikkei 225 stock index would also rise by as much as 38% during the same period.

Therefore, investing in the island country can actually increase assets by as much as 156.7%, which is even higher than the UK!

Most importantly, investing in the island country does not have to worry about a sharp decline in assets due to a stock market crash like the UK in 1987.

Because in the crazy year of 1988, the Nikkei 225 stock index even nearly doubled from its 1987 level, reaching 33,000 points!

So if you really waited until 1988, and invested $100 million now, it could become $480 million!

With this rate of return, you can immediately set up a long position in the Taiwan stock market and compete, and it doesn't take as long as it does to invest in the island country.

Compared to this, the profits from shorting international crude oil futures are just so-so.

However, the reason Xia Yu still wants to short international crude oil futures is that no matter how profitable investing in these countries is, there is ultimately a limit to the market.

Excessive enthusiasm can be just as bad!

What's more, he also needs to invest with other people's money to make even more money, so the amount of capital he can use is astronomical. A single market or two simply cannot accommodate it, and there is a risk of playing with the market and making it uncontrollable.

For example, if you invest in the Taiwan stock market, you can achieve a net return of 380% if you enter the market now and withdraw in the second half of 1987.

However, if he really allocates tens of billions of dollars, he won't be able to run away, and the market can easily be manipulated. Naturally, the extremely high rate of return will be like flowers in the water or the moon in the mirror.

Therefore, his focus is no longer limited to the interests of a single place, but rather he must look at the big picture and maximise the overall interests while controlling the risks.

This is the mindset of an excellent consortium controller!

A detailed investment plan must be formulated for how to invest.

Which countries should be invested in, when should one enter and when should one exit, what is the investment amount, how to use the profits gained, how to make secondary investments to increase the value of the profits earned, how to use this series of investments to effectively expand the consortium's existing companies, and how to deal with the risks and opportunities of the manufacturing industry caused by the depreciation of the US dollar...

All of this requires a detailed action plan and response measures...