Golden Spoon Investment Portfolio - Chapter 373

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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373. My luck is absolutely abysmal.

September 3rd, 1997. Gwacheon Government Complex.
In the Minister’s office of the Ministry of Finance and Economy, Lee Eun-hyung, the Deputy Prime Minister for Economic Affairs, sat in the center of the sofa, with Vice Minister Shin Seung-gi and Financial Policy Director Jung Ji-hoon flanking him on either side.
The atmosphere in the room hung heavy and oppressive, mirroring the foreign exchange market’s deteriorating condition contrary to all expectations.
Deputy Prime Minister Lee Eun-hyung stubbed out his half-smoked cigarette roughly against the crystal ashtray and opened his mouth.

“I hear trading was halted again in the foreign exchange market today. Is that correct?”

Financial Policy Director Jung Ji-hoon answered with an uncomfortable expression.

“Yes, sir. The demand for dollar purchases was so overwhelming that we had no choice but to intervene—the won was dangerously close to breaking through the thousand-won barrier.”

Before he could finish, Deputy Prime Minister Lee Eun-hyung slammed his palm against the sofa’s armrest and bellowed in fury.

“This is the fourth day! We’ve implemented financial market stabilization measures, yet the foreign exchange market hasn’t stabilized at all—we’ve had trading halts for four consecutive days. What in the world is going on?”

At his pressing question, Financial Policy Director Jung Ji-hoon broke into a cold sweat and spoke.

“Despite the stock market’s sharp decline, foreign investors’ movements to sell stocks and repatriate their domestic investments haven’t diminished—they’ve only intensified. Combined with domestic companies’ demand for dollar conversion to secure foreign currency, the exchange rate simply won’t fall.”

As he answered hesitantly, constantly glancing about, Deputy Prime Minister Lee Eun-hyung’s brow furrowed.

“Setting aside foreign investors—we’ve instructed commercial banks that anyone or any company converting more than ten thousand dollars must provide proof of actual demand. Yet you’re telling me the demand hasn’t decreased?”
“That’s correct, sir.”

Then Vice Minister Shin Seung-gi, seated across from him, interjected with a stern voice.

“Contrary to our intentions, it appears the conversion restrictions are triggering anxiety among finance companies and corporations, creating adverse effects.”

Vice Minister Shin Seung-gi continued speaking as he watched Deputy Prime Minister Lee Eun-hyung’s eyebrows furrow.

“As you know, the short-term foreign debt held by finance companies alone exceeds twelve point nine billion dollars.”
“….”
“In this situation, once the conversion restrictions took effect, panic spread that they might not secure dollars even at premium rates despite their already substantial exchange losses. Now everyone’s scrambling to hoard dollars.”
“Damn it!”

Before the financial market stabilization measures could be implemented, the worst-case scenario Lee Eun-hyung had feared materialized, and a curse slipped unbidden from the Vice Premier’s lips.
It wasn’t speculative demand driven by fears of future price increases, but genuine demand—companies desperately needing dollars and willing to accept losses to secure them. Jung Ji-hoon refrained from voicing this observation, choosing silence to avoid drawing unwanted scrutiny.
Amid this tension, Vice Minister Shin Seung-gi spoke carefully, gauging the irritation etched across Vice Premier Lee Eun-hyung’s expression.

“We may need to implement stronger measures before the situation deteriorates further.”
“What exactly are you proposing?”

Vice Minister Shin Seung-gi leaned forward as he responded to Vice Premier Lee Eun-hyung’s question.

“We should raise the benchmark interest rate like Hong Kong did and deploy our foreign exchange reserves more aggressively to defend the exchange rate.”
“Aren’t we already defending the exchange rate?”
“Currently, we’re only selling dollars reactively when the rate hits critical thresholds. Instead, we should proactively supply foreign currency to the market in sufficient quantities to dispel market anxiety.”

Vice Premier Lee Eun-hyung crossed his arms, his expression contemplative.

“That would require an enormous amount of dollars, wouldn’t it?”
“Even accounting for substantial intervention, ten billion dollars should be sufficient to stabilize the market.”
“Our total foreign exchange reserves are approximately fifty-nine billion dollars. You’re suggesting we deploy ten billion of that?”

Vice Premier Lee Eun-hyung raised an eyebrow, his tone skeptical.
Yet Vice Minister Shin Seung-gi pressed forward with his argument despite the sharp scrutiny.

“If anxiety continues to mount, stabilizing the market will require far greater resources. We should act preemptively now, before a small problem becomes catastrophic.”
“Hmm.”

Vice Premier Lee Eun-hyung stroked his chin thoughtfully, wrestling with the decision.
Deploying seventeen percent of total reserves was no trivial matter, and hesitation was entirely justified.
Then came a knock, and a secretary burst through the door in visible agitation.
Interrupted mid-conversation, Vice Premier Lee Eun-hyung’s brow furrowed and his voice sharpened with irritation.

“What is it?”

The secretary flinched under his gaze but quickly collected himself, stammering his response.

“There’s urgent news to report.”
“Speak.”

Vice Premier Lee Eun-hyung’s tone was curt and dismissive.

“Moody’s is planning to downgrade the credit ratings of four major domestic banks.”

The unexpected news caught Lee Eun-hyung, the Deputy Prime Minister for Economic Affairs, and the other two officials completely off guard, their eyes widening in shock.

“Is that true?”

Lee Eun-hyung pressed his staff member with an expression of disbelief.

“Yes. Bloomberg News just released the information as a breaking news bulletin a moment ago.”
“This is…”

Lee Eun-hyung’s face contorted as he pressed his temples, struggling to ease the throbbing in his head.

“The situation just keeps getting more tangled.”

* * *

[We’ve downgraded the long-term credit ratings of Wooyoung, Hansung, and Ilhan Bank from Baa2 to Baa3, while Foreign Exchange Bank’s rating has dropped to Baa2.]

With one hand thrust into his trouser pocket, Seok-won stood before the floor-to-ceiling windows of the living room overlooking the brilliant night cityscape, responding to Landon Shore’s words from New York with a composed expression.

“Baa3 is just one step before junk bond status—the non-investment grade threshold.”
[That’s correct. Moreover, the short-term credit ratings of these four banks have also been lowered from Prime -2 to -3.]
“With deteriorating long-term outlooks, it’s only natural that short-term ratings would turn negative as well.”

A downgrade in credit ratings for banks—where creditworthiness is everything—was no trivial matter.
Moreover, the four banks in question were major commercial banks with substantial scale domestically, so the ripple effects would be far-reaching and obvious.
Yet despite the gravity of the situation, Seok-won’s response was so composed that Landon Shore felt somewhat deflated as he asked.

[Did you anticipate this would happen?]

Seok-won replied in his characteristically measured tone.

“When major conglomerates like Hansei and Kichang Group went into cascading defaults, the scale of non-performing assets burdened by commercial banks—including the four banks whose ratings were just downgraded—isn’t precise, but even a conservative estimate puts it at around 13 trillion won.”

Seok-won shrugged and continued.

“Lowering the credit rating is actually the natural course of action. With losses totaling 14.4 billion dollars.”
[Now that you mention it, that makes sense.]
“More importantly, this credit downgrade will serve as a signpost to the hedge funds—already seething from their losses in Hong Kong—that their next target is here.”
[I was actually about to mention that. Since Moody’s announcement, the amounts hedge funds are borrowing from major banks like Citibank, BOA, and Barclays have been increasing.]

At that, Seok-won’s eyes gleamed as he held the phone to his ear.

“Pooling capital means they’ve identified their next prey and are preparing to strike.”
[That’s highly likely.]

Though I’d braced myself, seeing the hedge funds’ imminent movements, my expression hardened.

“What about the Quantum Fund’s movements?”
[They’ve gone a step further—we have intelligence that they’ve secured substantial won from Japanese banks.]
“Japanese banks… Well, among the major banks, the ones holding the most won relative to dollars or yen are those with heavy trading ties to Korea.”

A bitter smile crossed my lips.

[Based on the current atmosphere, the real offensive will begin the moment the dollar-won exchange rate breaks through 1,000 won.]
“If the 1,000 won psychological threshold collapses and massive won selling follows, the market will be consumed by complete panic and fear.”
[The hedge funds are likely banking on exactly that.]

Landon Shore fell silent for a moment, then continued in an even more cautious tone.

[And having learned lessons from Hong Kong, they won’t drag this fight out—they’ll aim for a swift, decisive victory.]
“I’d do the same. And with foreign exchange reserves far smaller than Hong Kong’s and no powerful backers to help, the fight won’t last long.”

The thought that the foreign exchange officials and politicians facing the speculators would be significantly outmatched crossed my mind, but I swallowed it.

[When the Quantum Fund and other hedge funds launch their attack, what should we do?]
“As we discussed before, we won’t get involved in this fight. We’ll simply monitor the situation and observe from the sidelines.”
[Understood.]

Since we were already generating more than sufficient profits elsewhere, Landon Shore simply followed the directive without further comment.

[Oh, and Nick Reynolds reached out wanting to meet with you.]

I paused briefly to recall, then remembered who he was and responded.

“Are you talking about the Qualcomm CEO?”
[Yes, sir. It seems they’ve noticed we’re aggressively accumulating Qualcomm shares and want to have a conversation about it.]

Seok-won recalled the Qualcomm matter he’d momentarily set aside while focusing on the IMF crisis that would soon shake South Korea, and posed the question.

“How much of their shares have we acquired so far?”
[As of today, we’ve surpassed approximately 21%.]
“We’ve secured quite a substantial position in the interim.”
[During the Black Monday crash not long ago, Qualcomm shares plummeted over 30% along with the New York Stock Exchange. Following your instructions, we capitalized on the panic-driven selloff and managed to sweep up shares at bargain prices on a massive scale.]
“Well done.”

Landon Shore chuckled briefly before asking in return.

[He reached out to me again today. What should we do?]

Seok-won paused in thought for a moment, then quietly shook his head.

“We’ve already decided on a hostile takeover, so there’s no need to meet face-to-face unnecessarily. Even if we do meet, it’s better to do so after we’ve secured a clear advantage. For now, let’s focus on accumulating as many shares as possible.”
[Understood.]

After continuing the conversation for some time longer, Seok-won ended the call and folded his phone, slipping it into his trouser pocket.
Then, gazing out through the floor-to-ceiling window, he murmured in a heavy, subdued voice.

“If those ravenous hedge funds press their assault, how long can South Korea hold out?”

By year’s end—or perhaps even within a month—the nation might struggle to endure.

“If they abandoned the band and released the exchange rate now, the situation might improve somewhat… but that’s unlikely to happen.”

Under ordinary circumstances, perhaps. But with a crucial presidential election looming, the Blue House and the government would redouble their efforts to maintain the status quo at all costs.

“Of all times, a foreign exchange crisis had to strike now. The timing is absolutely cursed.”

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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