Super Spender

Chapter 341: 335: The Storm Arises – Part 2

“President Chan, I am going to make a move on the petroleum futures market if you have any long positions,” Lewis finally placed a call to Matthew Chan.

“Uh…” Matthew Chan was rendered speechless. However, Lewis could totally take action directly. Calling them in advance was already providing significant face. After having a discussion with others, Chan opened his mouth offering, “The bank has no position in the petroleum futures market. We are involved in the gold market because we have recent information about a rise in gold futures. We rarely deal in futures.”

“Uh, okay, anyway, once I withdraw, you can continue. You have ample funds anyway. By the way, you can short oil. Consider this tip a gift from me,” Lewis shrugged.

The leverage of the banks’ orders was not very high. Based on banks’ margin capacity, bankruptcy would almost be impossible. Moreover, Lewis would not indefinitely keep dumping. Thus, the banks were not worried. However, the situation was different for Naspers Limited.

They did not have enough funds. After confirming with the banks, Lewis directly asked Olivia to take action. In comparison to gold as a hedge against inflation, the petroleum futures market is significantly larger. Moreover, petroleum futures involve different types such as light crude oil, heavy oil etc., yet this posed no problem for Olivia.

There are many important futures markets worldwide. One could easily buy oil anywhere. This time, Olivia did not demonstrate the same gentleness as when she was trading in the gold futures market. She opened with a short position of 1 million lots. Each lot consisted of 1,000 barrels of oil, amounting to a total of 1 billion barrels of oil.

At the current oil price of 102 Federal coins per barrel, this 1 million lot short position equated to 100 billion Federal coins. Of course, not too much margin would be needed. Olivia still continued to use a 1:100 leverage. A short position of 1 million lots only required a margin sum of 10 billion Federal coins.

However, this 1 million lot short position caused a massive fluctuation in the entire oil futures market. Following that, Olivia released another short position of 500,000 lots, which caused even more short positions to appear. At a glance, Lewis knew that these short positions should belong to Reeve Silver and Red Flower Bank.

“The banks have entered the market, although they are rather conservative, allocating funds of tens of billions of Federal coins,” Olivia’s voice said quickly.

“Their leverage is approximately 1:20. In other words, when the price drops by about 5%, their earnings would have basically doubled,” Olivia was well informed about the banks’ operations, “Red Flower and Reeve Silver are more conservative. They merely closed out their earlier long positions, and even though they have opened short positions, it isn’t too bad.”

“Young Master, you can tell the banks that if they dare to be a little bolder, they should keep this short position. The final profit will surpass their expectations,” Olivia said in a hurry.

Lewis pondered. He himself didn’t plan to trade futures, it was all Olivia or Zero who was meddling with it. Lewis didn’t like this kind of gambling activity, but that doesn’t mean he doesn’t understand the value of doing others a favor.

Being a state-owned bank, giving face to the bank was akin to giving face to the country. “You mean, oil prices will fall?” Lewis asked tentatively.

“The price for each barrel of oil is now around 100 Federal coins, the international crude oil price is expected to drop to around 50 Federal coins. This could occur in about 6 months, or perhaps even less time,” Olivia stated quickly.

“It won’t rise again?” Lewis asked in surprise.

“It’s difficult.” Olivia provided a terse two-word reply.

“I see.” Lewis acknowledged, thought for a while, immediately picked up his phone and called Matthew Chan. Such things would not be mentioned to Oscar Blair or Lawrence Rodger.

“Mr. Lewis?” Matthew Chan found it strange to receive Lewis’s call.

“I noticed that your funds have entered the market,” Lewis said directly.

As Lewis began speaking, Matthew Chan was slightly taken aback. After all, the bank had entered the market quite discreetly. The fact that Lewis found out as soon as they made their move implied that Lewis had a very powerful team backing him. It was evident that Lewis was the fund manager of the private equity fund.

“Here’s a tip for you, your leverage is currently 1:20. Raise it to 100 billion

Federal coins, and hold onto your short position slated for delivery around February next year. According to the 1:20 leverage, at a price of 100 Federal coins per barrel, you can open a short position of 2 million lots. Just keep holding onto it. By the end of February next year, you can finalize it,” Lewis

said casually.

“This…” Matthew Chan was stunned. He understood what Lewis was saying as he was a finance professional, but Lewis’s words suggested that oil prices wouldn’t rise ahead of February next year!

Matthew Chan wanted to say something, but Lewis had already hung up the phone. Chan hesitated for a moment, then immediately related Lewis’s words to the bank’s decision-making layer. After pondering for a while, the parent bank quickly made a decisive move – if Lewis’s identity was confirmed, what Lewis said couldn’t be taken lightly; it must be taken very seriously.

Although the bank was not established very long ago, it did not mean that they were not familiar with the fund. How could they not trust him when such a terrifyingly capitalized fund trusted Lewis so much?

The bank was already sitting on short positions with ten billion Federal coins.

It was not difficult for them to increase it to hundred billion Federal coins. However, even though they had entered the short position, their contracts were not yet established because Lewis’s nearly two million lot short positions were placed previously and they had not been finalized yet. Naturally, it wasn’t their turn yet as no one was buying long positions now.

Matthew Chan was at the bank’s investment finance center, where there were hundreds of professional traders stationed.

“They have canceled the order!” Just as Matthew Chan and the bank president watched the futures plate, someone suddenly shouted out. Clarence Johnson immediately asked loudly, “Who canceled the order?”

“Target 1 canceled the order! They have only about 100,000 lot short positions in effect now. The rest of the orders have all been canceled,” the trader tasked with monitoring the funds of Lewis’s group – the so-called Target 1 announced..