Vol 3 Chapter 10: I am worried that your bank has no money to pay me

Finished.
Shen Jiannan picked up the money-free coffee and tasted it. Charlie Cao immediately took out the prepared contract and handed it to the HSBC team.
There are five copies in total, one for manpower.
The HSBC group looked at each other with a suffocated smile, and they had to grit their teeth to restrain.
This is well prepared.
A guy who is so arrogant and arrogant can be so stupid.
The market has already proved an idiom.
The strong are always strong.
Thailand came from behind and emerged from the four tigers and ranked first. Thanks to the opening of the financial market by the Bank of Thailand, it will act like a magnet to attract capital from all over the world to Thailand.
With the innumerable capital influx, it is impossible for Thai real estate to fall.
Stupid?
From the perspective of HSBC, this is indeed a very stupid investment. 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 think this is a very stupid investment.
Regardless of whether it is securities, futures, resources, etc., there will be certain rules in the rise and fall of its prices.
This law can be called a trend.
The formation of a trend is caused by a combination of various reasons, which can be said to be the general trend, or the inevitable result of the game of various comprehensive factors.
Just like countless small rivers entering a big river, the roar of the big river is simply something people can resist.
Simply put, the formation of a trend is not a day's work.
Similarly, when a trend comes to an end, it will not collapse in a day.
In terms of probability and statistics.
In an upward trend.
The highest probability that can be touched is very low.
Calculated on the basis of three hundred and sixty-five days per year, then there is only one highest in the year. If the statistics are used for ten years, then this probability is one in three thousand six hundred and fifty.
The real estate industry has a period of several decades, so the probability of the price becoming the highest is one in tens of thousands.
This is the simplest logic math problem.
But precisely because of simplicity.
It's as simple as the stock market, futures market, or material and real estate market.
There will always be people who think they can sell the highest or buy the lowest.
Every year, every day.
In a declining market, there will always be countless smart people who choose to buy and buy bottoms, and in a rising market, there will always be countless smart people who choose to buy short selling.
Human beings are smart because they like to complicate simple things.
In this regard, Cohen Merriweather has seen too much.
You can't catch a wolf if you can't bear the meat.
Shen Jiannan knows Meri Weather's thoughts.
Which of these bankers is not cunning like a fox, if these guys think he is smart, then he can go out now.
No one knows a deal that will lose money.
HSBC's senior management are all financial elites with academic backgrounds. After reading it back and forth several times, several people quickly figured out what the contract offered by Capital One was.
This is a gambling agreement.
It is very close to the credit default swaps in the US real estate bond market, but it is different from the credit default swaps in the US real estate market that use bond asset prices as the subject matter.
Take the well-known real estate in many cities in Thailand as the subject matter, adopt the weighted average valuation, and use the international currency dollar as the unit of calculation.
When the weighted average index of house prices continues to rise, Capital One must pay HSBC monthly premiums sufficient to fulfill the contract
When the housing composite index continues to fall, the bank will pay the first capital insurance premium.
Kind of similar to an insurance contract for property preservation.
For example, buy a personal insurance or vehicle insurance for a friend, but the beneficiary is the insured person.
But not exactly.
In conventional life or property insurance contracts, the maximum amount of compensation is calculated based on the amount of premium paid by the insured and the length of insurance coverage. If the insured person or assets in the middle of the contract suffered accidents, the insurance company will pay in accordance with the terms of the contract.
But if there is no accident in the middle of the insured bid, then the policyholder’s annual premium will be equal to paying for nothing.
It can be said that in a conventional insurance policy, the insured or assets are the subject matter.
After the performance of the contract is completed, no matter how much premium the insured 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 similar to securities, futures, and foreign exchange options 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 volume of the buyer and the seller can be separated from the physical volume and multiplied indefinitely.
The text of this contract given by Capital One is equivalent to buying a weighted option contract for value-preserving insurance for real estate investment in Thailand.
If the value of the house rises, the premiums paid by Capital One will be in vain. Only when the value of the house drops, Capital One can benefit from this.
This contract is similar to an insurance contract in that the bank is responsible for the performance of a contract similar to that of an insurance company.
The insurance coverage 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 a premium of 1% every year.
In other words, if Capital One purchases a credit default swap with the highest payout value of US$100 million, it will need to pay a premium of US$1 million every year. If the house price rises or is higher than the value at the time of his purchase contract, Capital One will lose one million dollars in vain.
Only when the price of the house is lower than the value of the purchased subject, Capital One can receive HSBC's compensation.
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 Thai real estate is higher than or equal to US$1,000, Capital One will lose US$1 million if it purchases a US$1 million credit default swap.
Only when the average price of real estate in Thailand is less than one thousand U.S. dollars, Capital One can receive compensation from Standard Chartered.
This amount of compensation depends on the actual price of the comprehensive weighted price of Thai real estate when the first capital redemption contract or when the option contract expires.
If it is 990 U.S. dollars, Capital One can get the amount of compensation from Standard Chartered. The lower the price, the greater the amount paid by HSBC.
The compensation amount is calculated as ten dollars multiplied by five hundred percent.
Putting down the documents in his hand, Cohen Merriweather rubbed his nose. There was nothing he could do. He was worried that he would laugh out loud. Then, it would be no good to scare the big fat sheep away.
After kneading it several times in a row ~EbookFREE.me~ Cohen Meriweather finally restrained the urge to laugh. He looked at Shen Jiannan sincerely and said.
"Shen, as a friend, please be honest. This is really a stupid investment."
No loss is a top banker.
Shen Jiannan raised his eyebrows lightly. At this time, he was able to be so hypocritical. No wonder this guy can control HSBC.
In the future, what will these guys look like?
Shen Jiannan also wanted to laugh suddenly.
Fortunately, this guy has a lot of control.
After finishing the whole face, he felt like twitching, he said.
"I only care about the solvency of your bank when the Thailand real estate index drops, yes. I am worried that your bank has no money to compensate me."