Golden Spoon Investment Portfolio - Chapter 402

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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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402. The sharp decline you mentioned before is finally arriving.

November 5, 1997.
When IMF Managing Director Paul Townsend’s remarks from Japan were reported and the detailed terms of the agreement became known through the media, public criticism erupted that the government had adopted an overly submissive stance, unilaterally accepting the IMF’s demands.

[Financial Market Liberalization That Opened Even the Home Front]
[Criticism Emerges Over Weak-Kneed Negotiations]
[Chain of Corporate Defaults and Suicides from Job Loss Continue]
[Citizens’ Coalition for Economic Justice Demands IMF Renegotiation at Street Rally]
[Citizens’ Coalition for Economic Justice: “IMF Agreement Seriously Threatens Korea’s National Interests”]
[Business Community Expresses Concerns Over Unilaterally Unfavorable IMF Negotiation Terms]

As negative public sentiment swelled, the political circles’ atmosphere—which had promised to uphold the agreement—shifted dramatically.

[Opposition Three Parties: “Will Immediately Pursue Additional Negotiations with IMF Upon Taking Office”]
[Opposition Demands Accountability from Economic Deputy Prime Minister Choi Jin-woo and Blue House Economic Advisor]
[Government Economic Failure Accountability Theory Spreads!]
[Both Ruling and Opposition Presidential Candidates Unanimously Demand Accountability from Economic Leadership and Investigation into Currency Crisis Origins!]
[Worker Dispatch System Agreed with IMF, Scheduled for Implementation in First Half of Next Year—Both Ruling and Opposition Presidential Candidates Oppose!]
[Political Circles Criticize IMF for Providing Emergency Funds While Infringing Upon Korea’s Sovereignty!]

Manager Choi Ho-geun stood with his arms crossed, gazing down at the newspapers spread across the conference table with a grave expression.
Though the newspapers came from different outlets, every front page was identical in one respect—they all carried large headlines about opposition and ruling party presidential candidates demanding IMF renegotiations.

“Manager. Your coffee.”

Section Chief Jung Hwan-yeop, wearing a burgundy necktie, sidled over and offered the paper cup he’d brought.
Manager Choi Ho-geun turned his head, accepted the cup, and spoke bluntly.

“You’re the one fetching coffee now? What’s the occasion?”
“Geez. Why are you being so prickly? Did you have a fight with your wife yesterday?”
“Tch. Annoying.”

Section Chief Jung Hwan-yeop, who had been cracking jokes with a sheepish grin, quickly changed the subject to escape the piercing gaze.

“Well, even the ruling party’s Democratic Justice Party candidate is now arguing that renegotiations are necessary. The government’s position must be quite awkward.”

Manager Choi Ho-geun’s expression turned bitter.

“Can’t you see it plainly? The agreement terms with the IMF have become a major issue during the election. Everyone’s making aggressive statements trying to gain one more vote without thinking about the consequences.”
“I heard that all the presidential candidates signed consent agreements before the deal was finalized, at the IMF’s request. Surely this won’t cause any major problems.”

Manager Choi Ho-geun furrowed his brow and brought a paper cup to his lips.

“I don’t know either. But one thing’s certain—it might boost approval ratings, but it does nothing to help us escape the foreign exchange crisis.”
“That’s true.”

Section Chief Jung Hwan-yeop nodded in agreement.
As Manager Choi Ho-geun scanned the articles on the front page, he sipped his coffee and marveled inwardly.
No matter how much I thought about it, it was astounding how the situation unfolded exactly as Seok-won had predicted two days ago.

“He really is remarkable.”
“Pardon? What did you say?”
“Nothing at all.”

Just then, the phone rang, and Deputy Manager Yu Seok-hyun, seated at his desk, picked up the receiver.

“Yes. This is Deputy Manager Yu Seok-hyun from the Daeheung Venture Capital Fund Management Department.”

Yu Seok-hyun, who had been taking the call while typing at his keyboard with the receiver wedged between his neck and shoulder, suddenly stopped, his expression turning startled.

“Really? Ah. Yes. I understand.”

At the sudden rise in his voice, all the employees in the office turned to look at Yu Seok-hyun.

Seeing Yu Seok-hyun hang up the receiver, Manager Choi Ho-geun, standing beside Section Chief Jung Hwan-yeop, asked:

“What’s going on?”

Unaware of the eyes fixed upon him, Yu Seok-hyun opened his mouth urgently with a grave expression.

“Shinra Securities has gone bankrupt.”
“What?!”

The shocking news sent the office into turmoil.

“Is that really true?”

As Manager Choi Ho-geun’s face hardened with the question, Yu Seok-hyun answered immediately.

“Yes. The Financial Settlement Institute has notified us of the first default after failing to prevent 175 billion won in bills that returned to the bank.”
“Hmm.”

Though final default hadn’t been declared yet, the amount of bills that needed to be prevented was far too large, so Manager Choi Ho-geun exhaled heavily and furrowed his brow.

“We had concerns about being stuck with money in a finance company that ceased operations, and now it’s finally happened.”

The other employees also couldn’t hide their shock, their mouths hanging open.
This was the first time a securities company had defaulted since the Great Securities Crash of 1963, when approximately fifty securities companies had gone bankrupt en masse.

“If it really does result in final default, the repercussions will be enormous.”
“They certainly will be.”

As Section Chief Jung Hwan-yeop muttered gravely, Manager Choi Ho-geun also nodded heavily.

“I’m going to visit the President’s Office. Find out exactly what’s happening with Shinra Securities—dig up whatever you can!”
“Understood.”

Manager Choi Ho-geun grabbed the jacket draped over his chair and hurried out of the office, leaving Section Chief Jung Hwan-yeop and the team members bustling about behind him.

* * *

“So what you’re saying is that even though they managed to prevent call settlements until yesterday by raising emergency funds using their stock holdings as collateral, their primary bank partner that was providing payment guarantees has withdrawn support.”
[That’s correct. Under normal circumstances, it wouldn’t have come to default, but with the IMF situation, the banks themselves are facing merger or bankruptcy, so they’ve determined they no longer have the capacity to keep rolling over the debt. It appears they’ve made the bold move to declare default.]

Seok-won, sitting before his expansive desk, nodded slightly while holding the receiver to his ear.

“They’re too overwhelmed just trying to survive themselves.”
[The banks have extended the final settlement deadline for the bills until 4 PM today, but considering that an additional 201 billion won in bills will return tomorrow, it seems unlikely they’ll overcome this crisis.]
“I share that assessment.”

Seok-won adjusted his grip on the receiver and continued.

“If Shinra Securities collapses like this, finance companies in similar circumstances will likely face chain defaults as well. Keep a close watch, and contact me immediately if you see any signs of trouble.”
[Understood.]

After ending the call with Lee Chul-gyun, Seok-won set down the receiver and exhaled softly.

“The real crisis has finally begun.”

Many people mistakenly believed the foreign exchange crisis had been resolved once South Korea received IMF bailout financing, but that was far from the truth.
After the IMF negotiations concluded, the presidential election and severe lame-duck period left the Blue House unable to function properly, creating a vacuum in state affairs.
The entire financial sector teetered on the brink of cascading defaults, while simultaneously the exchange rate soared, pushing the nation of South Korea toward an extreme crisis where the ship could sink entirely.

“If we stumble even slightly here, the nation will plunge into default in an instant.”

Seok-won’s expression grew increasingly grave.
Not only was the economic control tower failing to function properly, but worst of all, through the IMF agreement, the exchange rate had been liberalized and every last safeguard had been dismantled, making the nation far more vulnerable to shocks.

“The real problem is how the IMF crisis unfolding slightly earlier than I remember might act as an unpredictable variable.”

Seok-won tapped his fingers rhythmically on the desk as he contemplated the situation.
Unlike the original history where the nation had been driven to the cliff’s edge by his existence yet ultimately overcame the crisis, a different outcome was now possible—and that possibility unsettled him.

“I have to prevent that no matter what.”

That was why I had prepared a massive sum of dollars and, fearing it might not be enough, borrowed an additional twenty billion dollars using stocks as collateral.
As I was calmly organizing my thoughts on how to proceed, a knock sounded and Na Seong-mi opened the door, speaking.

“Manager Choi Ho-geun from the Fund Management Department has arrived.”
“Have him come in.”
“Yes, sir.”

As Na Seong-mi stepped aside, Manager Choi Ho-geun entered the President’s Office.
He approached the desk, bowed respectfully, straightened his posture, and spoke with a tense expression.

“I have an urgent matter to report.”

Seok-won, immediately grasping the reason for his visit, leaned back in his chair and spoke.

“You’ve heard that Shinra Securities has defaulted for the first time.”

Manager Choi Ho-geun’s expression showed momentary surprise, but he quickly nodded, realizing that someone like Seok-won would naturally have received the news first.

“That’s correct.”

Seok-won interlaced his fingers and spoke in a grave voice.

“It’s still technically a first-stage default, but the primary bank has already withdrawn its support. And as you know, the Ministry of Finance and Economy isn’t in a position to mount an emergency rescue. We won’t make it past today—it’ll proceed straight to final default status.”

Though I had suspected as much, hearing Seok-won state it with such certainty caused Manager Choi Ho-geun’s expression to harden further.

“On top of suffering losses of 40 billion won in deficits this year alone and 70 billion won in unrealized losses on equity holdings, their affiliate Shinra Finance was suspended from operations, which froze 150 billion won they’d lent out completely. It would have been impossible to hold on any longer.”

A complex expression crossed Manager Choi Ho-geun’s face.

“It still feels unreal that Goryeo Securities, which was thriving just months ago, constructing a cutting-edge 22-story building in the Yeouido Securities District, has now collapsed.”
“That’s the price of intoxication at the party—failing to notice the crisis approaching and acting with complacency. But the real problem starts now.”

Seok-won continued, looking at Manager Choi Ho-geun standing before him.

“With Shinra Securities crumbling, we’ve shattered the belief that financial institutions never fail. This could become the catalyst that triggers mass panic and bank runs among the public.”

When the word “bank run”—the most terrifying term in the financial industry—left Seok-won’s lips, Manager Choi Ho-geun swallowed hard without realizing it.

“If that happens, deposit withdrawals will spread from the problematic finance companies and securities firms to commercial banks and the entire financial sector, deepening the credit crunch in the capital markets.”
“….”
“To respond to such a crisis, securities firms will begin indiscriminately dumping all the stocks and bonds they hold, heedless of losses, to secure as much cash as possible. When that happens, the stock and bond markets that have shown signs of recovery over the past few days will collapse—it’s only a matter of time.”
“Then the crash you mentioned before will arrive.”
“Exactly.”

Seok-won answered with a bitter expression.
But only for a moment—his demeanor shifted, and he spoke with a cold, calculated tone.

“Once fear has completely collapsed the market, we sweep in and buy.”

While it would be a devastating shock to the financial sector and stock and bond markets, for Daeheung Venture Capital—sitting on massive cash reserves and waiting for the right moment to buy—it was a golden opportunity.
Manager Choi Ho-geun, understanding this reality, felt his eyes gleam with intensity.

“Understood.”

Seok-won issued detailed instructions on how to proceed and then dismissed Manager Choi Ho-geun.
As the door closed, I moved the mouse and brought up the stock trading window on the computer monitor.
By then, news of the first-stage default had spread, and Shinra Securities’ stock price was plummeting vertically in sharp decline.
Not only Shinra Securities, which faced imminent bankruptcy, but other securities stocks that had surged strongly immediately after market opening and led the market’s recovery were all collapsing in unison.

“Soon, the panic will spread rapidly from securities stocks beyond just the financial sector to the entire stock market.”

Contemplating the situation that lay ahead, Seok-won gazed at the market movements with a heavy expression.

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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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