One Step to Danger

by John Gubert

  By then I had done the calculations in full. “OK, if we close today at the prices at end of day Hong Kong we make a net five hundred and fifty one and a half million. We always had just over a hundred million in the banks. So all in we have a war chest of six hundred and fifty one million. And we should be able to fast track in the bulk of the eight hundred from the scam. Fucquet would expect our clients to be ecstatic rather than just grateful. And that would mean more inflow of funds!”

  We waited expectantly for the next morning in Europe. That took us through another day in the Far East. The markets remained nervous but less frenetic. It was as if they were taking their breath. In the end we managed to close out the positions with a profit of a bit over five hundred and eighty million. Our war chest was getting serious. And we quickly gave instructions for an inflow of funds into Fucquet, making sure that it looked like many clients paying in money. For that we used up to twenty banks to remit through to Fucquet, who in turn were relieved to see more money and the chance to make good their losses. We also built up a second war chest at the United Bank. In total we had just under one and a half billion of fund to play with.

  With business like efficiency, we spent a long time in conference planning our next moves. We decided that we were certain that the next things to go would be the Hong Kong peg. My father was also convinced that the Japanese banks were worth a punt. They were heavily geared, had lent money all over the Asia Pacific region and he could not see them surviving unharmed.

  “It’s just manipulation,” he said coolly. “There’s no way that their current levels are justified.”

  We restructured our trading facilities and agreed additional ones by fax with the United Bank in Geneva. Fucquet now held five hundred million of our funds. They would be careful about too much risk now but they knew us and would be trying to recover some of their losses. We pushed a hundred million into Hochzeit. But we put the big money into United. They held eight hundred million now. They were more conservative but they would trade larger than the others for they were by far the biggest of the banks.

  As we sat and discussed tactics, my father decreed that it was time to launch a new vehicle, a new Asian hedge fund. He wanted to be close to Hong Kong. “You two are excellent at spreading rumours. That we know. You’re a bit young but you can be convincing. In fact, I have to say that you bullshit perfectly. I want you to go to Hong Kong. You can base yourself in the Mandarin and act as our eyes and ears. Oh, and spread rumours to your hearts’ content.”

  We agreed and Jacqui was quite excited to think that she was going somewhere new. So we had our fake business cards printed and called the major brokers in Hong Kong for appointments. They were enthusiastic to see a new two billion dollar plus fund. We explained we were launched by a group of very private investors and would be working on a hundred million-dollar trades.

  We asked them to think through regional strategies for us. We told them we were willing to short or go long. But we needed performance and we needed it fast. Our sponsors had given us a limited pool of money but if we performed they would add more. And if the fund performed, more investors would join. So we were on a ride. Performance meant extra funds from the existing investors and new funds from new investors.

  They understood what we meant. They knew business was tailing off as it always does in a market slump. Then the markets fall on small volumes and the big investors stay away until the market turns. They were keen to attract us as they saw us as immediate term commission. We would get a good welcome when we reached Hong Kong.

  Yes, they were keen. Yes, they were good. Yes, they were willing to act for a commission. We gave them convincing references from Fucquet and United. They hardly checked once they were sent a note saying we had several hundred million dollars lodged in each of the Fund accounts.

  The Swiss banks were surprised when asked to confirm this and insisted that we gave them our instructions in writing. Secrecy is inbred and that unusual instruction ran counter to their culture.

  My parents, having decided that it was time to move from their California base, rented an apartment down the coast near San Diego. It was useful to be close to a border. This time it would be the Mexican one. And any longer stay in the health resort would appear strange. We had already got concerned that our unusual activity could raise suspicion. But in the end, so many super rich people were there that they accepted our behaviour. They thought we were workaholics and didn’t bother as long as we paid our bills.

  We all went to Los Angeles and had dinner together before Jacqui and I headed to the airport and caught the United flight to Hong Kong. We were in first class. That fitted our cover to perfection.

  SOJOURN IN HONG KONG

  The plane came into the new airport at Hong Kong. It lacked the excitement of a landing at the old Kai Tek airport. There, you swooped over and between the houses in a breath-taking dive to the runway stretching out into the sea. The smell of the city would flood in through the ventilation vents as one walked along the somewhat decrepit and crowded corridors to the chaos of immigration and the casualness of customs.

  Now we walked along new corridors that were pristine clean and had all the excitement of any of the antiseptic pathways of modern airport architecture. The place was more efficient and we soon were in the hotel car area. The Mandarin had sent, at my request, one of their Rolls Royces to pick us up. We sat back in the leather luxury of its seats, watching the high rise buildings of Hong Kong Island approach us from afar. The weather was fine and warm outside, but we did not feel it in our air-conditioned luxury.

  We swept round past the imposing façade of the Hong Kong Bank, vying for position and dominance with the adjacent, taller and slightly more splendid, Bank of China. Then we glided into the drive and drew up outside the main entrance of the Mandarin.

  Porters jumped forward to take our luggage. We were ushered in to the lobby, and then immediately up to our room. A plumpish girl of indistinguishable nationality, dressed in a Mandarin uniform, accompanied us. We completed the formalities, as is normal practice there, in the comfort of our bedroom.

  Gratefully, we accepted the offer of Chinese tea and quickly unpacked our luggage, which followed us by moments. We decided that we would stroll around the Central District and then eat in the coffee shop, before trying to get some sleep. After the rigours of the overnight journey from Los Angeles, it is difficult to make the jump into the different time zone of Asia.

  I called my father and told him that we were in place. He was excited and said to me, “Look at CNN, the markets are going crazy again. They are soaring. It’s a technical reaction and we might get another bite at the cherry. I want you to do a trawl of opinion in the morning. Focus on the Thai and Hong Kong markets as well as the four we hit last time. Thailand is up over thirty per cent and Hong Kong by nearly as much. And it looks as if some of the others could increase more than that. Brief me at eleven o’ clock your time. And call United in Hong Kong to see what indications they are giving for options and in what size.”

  I agreed and explained the situation to Jacqui. “We could really make a killing now that we have a big slug of cash to play with. We’ll see tomorrow. Let’s get out for some air, if that’s what you can call it here.”

  We wondered outside into the warmth of a Hong Kong evening. The streets were crowded with people. All races mingled together in this most cosmopolitan of cities. The endless stream of evening traffic belched out their polluted trails as they ferried their captives from office to home. The larger cars headed majestically up to the Peak. The buses and trams rushed to more humble areas.

  The shops of Central were still lit up. They gave little sign of a currency in crisis or an economy under threat. We looked in the windows of the designer shops and Jacqui frowned at the clothes. “A lot of the tacky end of the designer range,” she announced. “The stuff isn’t as much fun as in Europe. They buy the label rather than the dress. And the prices look outrageous.”

  “Wel
l,” I responded ironically, “Perhaps they’ll be more realistic when we have hit their currency.”

  We wandered up through the streets, past monumental office blocks, populated by banks and other financial organisations. We strolled through shopping malls bursting with small businesses selling all kinds of produce. We loitered in streets awash with scurrying people. And we crossed roads crammed with anything from a Rolls Royce to a rusty bicycle.

  Looking up, we saw the sky peep out from behind the odd building. We saw the Peak take on its polluted haze. The sun gave up on the people and concentrated on the roofs of the skyscrapers before moving totally away from the Island. And we walked back to the hotel. The Captain’s bar downstairs was buzzing with amiable brokers and bankers, talking sex and sport rather than stocks and shares. The lobby was a gentle flow, with eager staff quickly handling the occasional guest enquiry.

  We walked into the coffee shop. It still held the remnants of the local café society as well as the first wave of hotel residents. The locals were dressed in formal wear, while the residents contrasted in more casual clothes. We ate and once again played our favoured game of guessing our neighbours’ occupations. Indiscreetly, we joked about them and laughed at the excesses we alleged against them. Nobody else could have torn apart his or her characters so viciously. The game over, we headed upstairs and to bed. The next day was going to be a busy one.

  Next morning, we dressed our parts. Our business type suits were no longer crumpled. They had been pressed to perfection the night before. Jacqui’s was short skirted and body hugging enough to distract any red-blooded male from the fact that she was not a real expert. Nevertheless she was a good actress.

  “You would have made a great con man, or even a broker, you know,” I remarked. “You’ll never have to starve.”

  “Hell,” she replied, “It’s not starving that I want to avoid. Its moderate wealth or things like that. I plan to be super rich.”

  “Don’t we all,” I responded. “After all, it’s only the super rich that are above the law. Then one doesn’t have to pay taxes. One can slide around the strict rules the others have to obey. Breaking the law is stupid when you can manipulate it. One needs, especially in finance, to live in the grey band between the Law and Jail. Otherwise one never gets super rich.”

  “What will you do when we are all super rich?” she teased. “We’re not doing badly at the moment,” I retorted. “After all, we have over a billion and a half to our name.”

  “No,” said Jacqui, “that’s not super rich. That’s just moderately rich. Super rich is when you have influence. Super rich is when in the future people who are trying to work the system start scare stories. And they are about what you are doing. Super rich is when you buy governments.”

  “I guess so,” I said. “I doubt though that one can arrive at that until one has several billion under one’s belt. And, as the pot grows, we will have to be more cautious. Otherwise we become too big for the markets and would be betting against ourselves.”

  “What do you mean?”

  “Quite simply, if we are too big, we would find it hard to find people who could deal with us in a size that mattered. So we would have to change our strategy. We would become longer-term investors. We may play around a bit for fun, but it would be nothing like this. This gives you a buzz because you bet all. Doing it for a hobby would be boring.”

  “What would you do then?”

  “We could make love all the time. That’s not going to be boring.”

  “Even when I am fat after five kids?”

  “Hey, what’s this about procreation at twenty two?”

  “I’m Catholic. Don’t forget that. Or when we’re super rich and see the Pope, he’ll tell you off.”

  “Look, you’ve already sinned. So let’s sin a bit longer. Then you get one great big absolution. And then we please the Pope.”

  “But if I’m fat will you fancy me?”

  “What do you think?”

  “I doubt it. You’d find some little piece to have on the side. Perhaps one of those Asian girls. You know like the one you are ogling at now.”

  Her eyes flashed. “So what have you got to say?” she asked.

  “I wasn’t ogling at her. I was admiring her dress.”

  “The material’s rubbish. Her mother made it. It’s tight round her bum, which is over big for her size. It’s tight round the tits and that’s quite an achievement. The slit shows the tops of her stockings. And that’s naff. In fact that was a lousy answer.”

  “I came to the same conclusion as you did. But I had to look to come to it,” I replied.

  “You’re bullshitting me.”

  “No. I’m actually serious. But Jacqui, no thought police. I know the rules and have no desire to break them. But cool off.”

  She became indignant. “I am not going to cool off if you salivate after every little tart in the shop.”

  I stood up. She looked anxiously. Perhaps she thought she had gone too far. I walked over to her chair. I bent over her head and kissed her hair. Then I kissed her neck.

  People looked over. There was amusement on the faces of some. There was shock on the faces of others. There was bewilderment on others. I kissed round her neck and then down the open collar of her blouse. In a loud voice, I said, “I love you too. Don’t worry I’ll never embarrass you. After all your husband asked me to be discreet.”

  The faces now looked at us in excitement and worse. Jacqui went a bit red. Then she pursed her lips. Her eyes were sparkling with laughter. We had done this before but not in a place where we were scheduled to live for a bit.

  “Don’t worry about my husband,” she said. “After last night I decided to dump him.”

  I interrupted, “Given his origins, are you going to walk around him and tell him three times, I divorce you, I divorce you, and I divorce you.”

  She smiled. She was giggling. “No, why divorce him. Bigamy is much more fun.”

  I looked at my watch. “My God is that the time? I have to fly. I’ve got to get to Wan Chai and pick up my trousers.”

  She jumped up too. “Let me come with you. I’d love to see the place. It sounded so exciting. Losing your trousers. And in a convent as well.”

  As Wan Chai is the pink light district of Hong Kong, our fellow diners were perplexed to the extreme. Jacqui slipped her arm around me and guided me out.

  “Are you still mad with me?” I asked.

  “No. Sorry. But if you want a quick job, I’ll give it. I mean, she can’t have been good for anything else.”

  “Point taken. I love you stupid, and just you. So don’t worry. This is one person who is not going to let you down.”

  And for the first time in my life, I really meant it.

  Our room had two lines and three phones. So we both took out the list of contacts we had arranged and got started on the calls. I rang some of the local houses and they were universally bullish. They were seeing big buying orders. The Hong Kong billionaires were buying everything. The Central Bank of China was buying. Even the Swiss, usually so conservative, were alleged to be buying.

  Jacqui phoned round the international houses. She also got a consistent story. The Americans were buying and they were buying like mad. Two of the most regarded market strategists had called on their clients to double their exposure to the region. There were rumours of take-overs. That was inevitable. Equity was now undervalued. It had been higher before.

  We discussed the two variations.

  “There’s nothing in common with the stories. Other than the fact that they are all saying the market is flooded with buyers. I find that strange so soon after the fall,” she said.

  “That’s because we have heard fifty per cent bull-shit and fifty per cent real life. The market has short memories. Because it bounced back, it saw the fall as just a correction. And, as everyone makes more money on a rise, they want to be bulls. The brokers all talk of the same key clients. The rise appears to be supported but by the big
clients. That means that the brokers are putting their big clients into the market.”

  “But what will happen?” Jacqui enquired.

  “They’ll work their way through their client list and bring in the smaller clients. They always work like that. Get the big spenders in first and then work down the list. Finally you get the general public who buy when they see the rise. Then the market will fall as the guys who bought at the start of it all sell into the rise.”

  “But,” I continued, “we still should find out the price of options. And then we will need to phone my father.”

  I called United Bank. Their Hong Kong office covered the entire Asia Pacific region from Jakarta up to Seoul and down China and Japan across to the Indian sub-continent. They had heard of me and were expecting my call.

  “We have a series of portfolios in the region and I want to leverage them. Can you quote me options on a basket of markets in any size?”

  “Which markets are you looking at?” came the reply.

  “We’re thinking of a South East Asia portfolio covering the three tigers in Indonesia, Malaysia and the Philippines. Then we have one in Thailand and another in Korea. Finally we have our Hong Kong Fund.”

  “What sizes are you talking about?” he asked.

  “The South East Asia one is at two billion. The Korean and Thai funds are each three hundred million. The Hong Kong one is at a billion,” I hazarded.

  “You should use us for brokerage. I don’t think we’ve ever seen your trades,” he noted.

  I sensed greed in his voice. We could use this to good effect. I lied easily as I replied, “Most of our business has been done through the European houses but we are moving over here. In future, we will be trading here as well. I’ll be calling on you about our plans in a few weeks. We just don’t want to miss the excitement of this rise and so I’m perhaps jumping ahead of plans and could be dealing today. I’ll have to talk to my principals first, though.”