Golden Spoon Investment Portfolio - Chapter 441

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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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441. It doesn’t matter. We’ll sweep up the pot anyway.

[You’re shorting Russian government bonds?]

Unlike Landon Shore, who couldn’t hide his bewilderment, I answered calmly.

“That’s right.”
[It’s true that Russia’s situation hasn’t been favorable lately, but bond prices have already fallen significantly in response. Even if we enter the market now, I don’t see much profit to be made….]

Landon Shore continued cautiously, gauging my reaction.

[Moreover, Russia’s fiscal deficit in the first quarter of this year showed improvement at 4.6% of GDP, down 3.5 percentage points from the same period last year.]
“The improvement is real, but that doesn’t mean they’ve escaped deficit spending.”
[….]

I rose from the floor-to-ceiling window and moved to the living room sofa, crossing one leg over the other.

“Russia hasn’t been integrated into capitalism for very long since the Soviet Union’s collapse, so corporations don’t carry much short-term foreign debt. But Russia’s economic Achilles’ heel lies in severe fiscal deficits.”
[The fiscal deficit issue is certainly significant.]
“They’re covering the annual fiscal deficits through government bond issuance, and the scale exceeded 140 billion dollars last year.”
[It’s certainly a large sum, but considering Russia’s national scale, it shouldn’t be an unmanageable level, should it?]

Seeing that he still viewed the situation optimistically, I spoke with a slightly subdued tone.

“Everyone probably sees it that way. But my assessment is different.”
[?]
“Most of their government bonds aren’t stable long-term bonds but short-term bonds with 1-3 year maturities, and they’re selling over one-third of the issuance volume overseas.”
[That’s because Russia’s creditworthiness is low, so demand for long-term bonds is weak, isn’t it?]
“Exactly. So they have no choice but to issue short-term bonds with high interest rates, and when bond maturities approach, they print even more bonds to pay off the debt.”
[…!]
“In other words, the Russian government is juggling debt. Yet they’re using one-third of their government budget just to service bond principal and interest.”

Leaning back against the sofa, I spoke with cold cynicism.

“They’re essentially dependent on Western investors buying their bonds. What happens if foreign investors suddenly stop purchasing them?”
[Are you saying hedge funds will attack Russia the way they did in Asia last time?]

Seok-won held the phone to his ear and responded calmly to the question asked in a startled voice.

“It’s not that. I’m talking about foreign investors who are panicking and making a mass exodus.”
[Such an extreme situation? I’m not sure what you mean….]

Seok-won spoke in a grave tone, sensing the confusion on the other end.

“For instance, what if a moratorium were declared?”

I heard Landon Shore’s sharp intake of breath through the receiver.

“Foreign investors would indiscriminately dump Russian government bonds without exception.”
[A, a moratorium, you say?]
“Yes. I believe Russia will face a moratorium situation in the near future.”

Landon Shore then hastily objected.

[Russia is no ordinary nation—it possesses vast territories, enormous underground resources, and nuclear weapons. Surely it wouldn’t declare a moratorium?]

His bewilderment was unmistakable.

“Britain, another nuclear power, once received IMF bailout financing despite severe economic hardship.”
[That’s true, but….]
“If Britain did, why would Russia be different? In fact, considering that Russia’s government hasn’t fully shed its communist economic system, unlike Britain which understands capital markets well, the situation would be even more precarious.”

After a moment of silence, Landon Shore spoke in a grave tone.

[So you genuinely believe Russia will declare a moratorium.]
“Otherwise, I wouldn’t be betting money on it.”

Seok-won answered with his characteristic unwavering conviction.

[Russia defaulting on its sovereign debt… Haa. If this truly happens as you say, it will send a tremendous shock through the global economy.]
“Not just the bond market—major stock indices worldwide will experience significant turmoil.”

The quick-witted Landon Shore immediately grasped the implication.

[Along with selling Russian government bonds, I’ll have short positions placed on major indices as well.]
“Do that.”

Seok-won smiled broadly and spoke.
Realizing that Seok-won intended to make another massive gamble following the Asian financial crisis, Landon Shore asked with a serious tone.

[How much are you betting?]
“We’ll maximize the leverage and go all-in.”

When Seok-won answered without hesitation, Landon Shore was slightly taken aback.

[You’re aware of the scale of assets our fund manages, aren’t you?]
“Of course I am.”
[If we go all-in as you say, we’ll easily exceed one hundred billion dollars.]

Seok-won responded with confidence to Landon Shore’s worried tone.

“It doesn’t matter. We’ll rake in the pot anyway.”
[Ugh….]

Landon Shore groaned before breaking into laughter.

[This is something else. A hundred billion dollar bet—my life has become truly dynamic since meeting you, boss.]
“Do you regret it?”
[How could I?]

Landon Shore answered with an excited voice.
He too had not forgotten the electrifying thrill of victory in a high-stakes game.
That sensation of exhilaration coursing from head to toe was the ultimate rush found nowhere else.

[I’ll consult with Andrew to establish a framework for how we’ll position ourselves specifically, then contact you again.]
“Do that.”
[Andrew is going to be absolutely shocked when he hears about this.]
“When Russia declares a moratorium, the financial stocks that have purchased government bonds will suffer the steepest collapse. It would be wise to structure our positions with that in mind.”
[Financial stocks are currently rising the most due to the successive large-scale mergers. The thought of them plummeting into hell soon is horrifying.]

Seok-won chuckled and spoke.

“The greater the rise, the steeper the fall. If we short them, we can capture substantial profits, don’t you think?”

Landon Shore was momentarily speechless before bursting into laughter.

[Haha! Once this is all over, I’m not sure if the boss’s nickname on Wall Street will change from the Midas Touch to the worst villain.]
“I never cared what people called me anyway, so it doesn’t matter.”

Seok-won shrugged his shoulders and replied coolly.

* * *

Aepae Group Headquarters, Seosomun-dong, Jung-gu, Seoul.
In the heavy silence that filled the room, Song Dae-seop sat in the center of the wide sofa in the Chairman’s Office, with Executive Director Baek Jae-woong and Aepae Construction President Hong Seung-han facing him across the table.
Chairman Song Dae-seop, his face anxious, chain-smoked while glancing at the watch on his wrist.

“It’s already past the time I should have heard from them. Why isn’t the phone ringing?”
“Let’s wait a bit longer.”
“Tsk!”

Chairman Song Dae-seop clicked his tongue irritably and continued to smoke the innocent cigarette relentlessly.
The crystal ashtray on the table was already overflowing with cigarette butts.
As more time passed and the butts piled into a small mountain inside the ashtray, a sudden bell tone pierced the silence.
Chairman Song Dae-seop hastily stubbed out his cigarette mid-drag and reached for the receiver.

[This is Woo Chun-il.]

At the heavy voice of Woo Chun-il, the Chief Secretary of the Blue House, Chairman Song Dae-seop hastily stubbed out his unfinished cigarette and answered in a deferential tone.

“I was just waiting for your call. What has been decided?”

Then Blue House Chief Secretary Woo Chun-il replied in a dry tone.

[As you know, the new administration’s basic position is that we cannot grant special favors to specific companies. However, taking into account Aepae Group’s difficult circumstances, we discussed with the President about making a special exception.]

Chairman Song Dae-seop, listening with a tense expression and swallowing hard, froze at the words that followed.

[There were various opinions, but since Gimpo Landfill was originally developed as agricultural land, changing its purpose could potentially invite unnecessary controversy over special favors. This was the general consensus.]
“…!”
[Therefore, unfortunately, the change of purpose for Gimpo Landfill is not possible, and we hope there will be no further disturbances regarding this matter.]

Facing bankruptcy due to a staggering 4 trillion won in debt, Aptae Group had pursued a zoning change for Gimpo Landfill as their final lifeline.
The plan was to attract a massive 4 billion dollars in foreign investment to develop the Gimpo Landfill.
The Gimpo Landfill, spanning 3.7 million pyeong, had been reclaimed with government approval to utilize surplus labor and equipment after the Middle Eastern construction boom ended, and was owned by Aptae Group.
When they were told the zoning change couldn’t proceed despite staking everything on it for survival, the world went dark before their eyes.
Chairman Song Dae-seop, unable to back down, clutched the receiver desperately.

“Couldn’t you reconsider this once more? Or perhaps I should go directly to the Blue House and speak with the President myself.”

But Chief Secretary Woo Chun-il, apparently irritated, cut him off with an exasperated tone.

[Don’t you understand that changing the zoning of the Gimpo Landfill, which is designated as agricultural land, directly contradicts our rice self-sufficiency policy and severely conflicts with our Seoul Metropolitan Area decentralization initiative!]
“Of course, but….”
[During the Ministry of Agriculture briefing early in the administration, the President himself instructed us to suppress rice self-sufficiency and prevent conversion of quality farmland as much as possible. And yet you ignore that, proceed without any prior consultation, and go blabbing to the media about establishing a foreign investment free zone and whatnot. Are you mocking the Blue House and the government right now!]

At this sharp rebuke, Chairman Song Dae-seop’s expression grew troubled.

“That’s not it. In trying to overcome the Group’s difficulties by any means necessary, I made mistakes in my haste.”

His attempted excuse fell on deaf ears.

[Just so you know, the President is quite displeased with Aptae Group’s actions in attempting to manipulate the media and shake the Blue House and government.]

Chief Secretary Woo Chun-il delivered the warning and hung up without waiting for a response.
Chairman Song Dae-seop, now certain that the zoning change for Gimpo Landfill—the last straw he’d been clinging to—had completely fallen through, squeezed his eyes shut.
As he weakly lowered the receiver, President Hong Seung-han, who was present, cautiously asked while gauging his mood.

“Did things go wrong?”

Executive Director Baek Jae-woong also looked on with curious eyes.

“Damn it!”

Chairman Song Dae-seop crumpled his face and spat out a curse.

“It’s land vast enough to build an entire small city from scratch. And they’re telling me to plant rice there? Does that even make sense!”

As he vented his frustration with a groan, both men’s expressions darkened.
They both realized the outcome had deviated from their expectations.

“If the zoning change for Gimpo Landfill falls through, we’re in serious trouble.”

Following Baek Jae-woong’s words, President Hong Seung-han spoke up with a dismayed expression.

“Just the bills coming due next month alone amount to nearly a hundred billion won. If we can’t settle them on time, we’re looking at immediate insolvency.”
“Ugh.”

Chairman Song Dae-seop pressed his temples with one hand, his blood pressure rising, and let out a heavy sigh.

“What if we simply sold Gimpo Landfill if the zoning change doesn’t go through?”
“If we sell now, we’d have to dump it for pennies as farmland. Absolutely not!”

Chairman Song Dae-seop flatly rejected Baek Jae-woong’s suggestion.
Then, as if venting his frustration, he spoke in an angry, pressing tone.

“Either way, we can’t just collapse like this. Go find the creditor banks and figure out some way to secure cooperative financing! If we default, the banks that lent to us won’t escape losses either.”

Though we’d barely weathered the national financial crisis, liquidity in the market remained severely tight, making it far from easy to secure additional loans.
Yet with no other options available, as Chairman Song Dae-seop had said, the two men reluctantly nodded in agreement.

“Yes.”
“We’ll do our best.”

Hearing their dispirited responses, Chairman Song Dae-seop’s face hardened and he bit his lower lip firmly.
A growing sense of anxiety, as if being driven toward a cliff’s edge, made him increasingly restless.

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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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