<strong>Chapter 900 – Thand’s economic situation</strong>


    “We should wait first, and it’s not time for us to enter yet.” Fu Rongqi replied.


    “Why?” Fu Guangzheng was puzzled.


    “It’s because the Thai government still has not entered the picture. When the Thai government intervenes, it will be a tough fight. A country’s government will have ways to stabilize the economy.” Fu Rongqi starts to impart his experiences to Fu Guangzheng.


    “Then, we can only wait now?”


    “That’s right. We will wait.”


    So, the Fu Family waited, and over a month passed. During this period, the Thai government had interfered and pulled up the depreciating Baht slightly. It’s already May, and Feng Yu had returned to Hong Kong. Kirilenko also followed him.


    “Feng, how long more must we wait?” Kirilenko’s patient is running low. It’s more than a month, and they had lost several hundred million USD. The current exchange rate for Baht is only 25:1, and the money they earned is not enough to cover their losses. Luckily, Thand’s stock prices are slowly dropping, and if they activate their futures contracts, they can recover most of their losses.


    “We must wait until Soros, and his men contact us. Thai Baht will only depreciate suddenly when both of us dump the currency at the same time.” Feng Yu was very calm. Forex trading is veryplicated and not as simple as what Kirilenko thought.


    “Then why did you start to short Mysia’s Ringgit?” Kirilenko doesn’t understand why Feng Yu did this. They had not even brought down one country’s currency, and Feng Yu is starting to target another county? Will they have enough funds to handle it?


    “You should not know that Mysia is Thand’s biggest trading partner, and both countries’ haveplicated and high debts. When Thand’s economy is hit severely, Mysia’s economy will also be affected.”


    Why is this crisis known as the Asian Financial Crisis? It is because the economies of the countries in Southeast Asia are intertwined. They depend on trade between the countries forming tight bonds.


    When one of the countries is hit, the rest will be affected, and it will be easier to attack the economies of the rest of the countries in the region.


    Kirilenko nodded. These few days, he could only see they are losing money every day. If it weren’t for the Future contracts being able to recoup his losses, he would have withdrawn from this operation. Without Feng Yu, Kirilenko will never attack Thand’s economy even with Soros’s invitation.


    How rich is Thand? The real GDP per capita is over 3,000 USD and is several times higher than China. This is almost equivalent to a developed country.


    But the weird thing is the average debt per person in Thand is over 1,500 USD. That means the overall debt of Thand is more than 50%.


    Thand’s economic development depends heavily on foreign investors and their export. Their exportation makes up about 42% of their GDP, and this is a significantly high proportion.


    This proportion ismon in many coastal countries in Southeast Asia, as sea trade is mainstream trading transportation.


    Secondly, the real estate sector in Thand is very popr, and it is also Thand’s other core industry. Foreign investors made up a significant portion of Thand’s real estate industry. Luxurious hotels, resorts, office buildings, golf courses, etc. were being built inrge numbers.


    Just Bangkok alone, there are two international exhibition centers and four more under construction. The hospitals there had three times more beds than required. Spection in properties had be the shortcut to riches.


    But there is a hidden danger in Thand’s property market. More than 20% of the properties were vacant. The buildings and houses were built for spectors.


    What was happening in Thand is very simr to the US at the end of the 1980s and Japan. Using properties and exportation as their core industries, will form a false sense of prosperity for Thand, and create a housing bubble at the same time.


    When the US property crashed, they shifted the crisis to Japan. After that, the US used its advanced technologies to recover from the crisis rapidly. Their property market also recovered, but Japan’s real estate industry is still in a bad situation. The smart Japanese businessmen thought of a good solution, which is to recreate a housing bubble in the rest of the countries in Southeast Asia and make money from there.


    This time, the Japanese businessmen are smarter. They will quickly withdraw from the market when the property prices reached the peak and let the countries’ governments take care of the mess. This way, they will earn money, affect the countries’ economy, and maintaining Japan’s position as the most powerful economy in Asia.


    Thand had used a free market economy. To develop faster, they had removed the taxes for bond trading, lowered the taxes forpanies’ shares, and even provide financial support for the Bondspanies.


    Removing the limits on interest and using interests to stimte the market will increase the country’s growth in a short period. Thand had also opened up the Foreign exchange, allowing overseas spectors to trade up to 500,000 USD. This caused the Thai government to have low foreign reserves.


    Maybe Thand had seen the benefits of having a thriving financial market in other countries, and they imposed lesser restrictions on their financial institutions. Offshore tradingpanies were allowed to set up, and Thand’s 50 banks, including 35 overseas banks, were allowed to ept savings and issued loans to foreigners.


    This is the reason why Soros, Feng Yu, and the rest could get loans in Baht easily.


    Of course, there is another important point. Thand allowed non-residents to set up ounts in Thand’smercial banks and allowed them to deposit, get loans, and exchange currencies freely. Thand’s economy is free.


    Having such policies will allow a high volume of overseas funds entering the country, and the country’s economy will develop faster. But this will also cause the downfall of Thand in this financial crisis.


    Thand does not have tight regtions on its financial sector, and there’s ack of supervision by the authorities. The country’s bonds and shares were opened to the outside and allowed international spectors to disrupt Thand’s financial system.


    There are also no limits to overseas investment, and the Thai government even wees foreign investors, as they thought it would be good for their economy.


    Companies can get loans easily, and the country’s debt snowballed. The national debt percentage had exceeded more than 50% of the country’s GDP, and this is a huge problem. On the surface, thepanies in Thand were developing well, but no one considered that after adding in the debts, thepanies were all making losses!


    The biggest creditor in Thand is Japan. Japan had set up the most number of banks in Southeast Asia countries,pared to other countries. They issued massive amounts of loans, and their investments in Thand is worth more than 1 billion USD.


    Even if Soros did not attach Thand, Thand’s economy will also notst after year 2,000. When Japan withdraw from Thand’s property and financial market, Thand’s economy will also copse.