“Is this that company? The one Assistant Manager Lee from the overseas team handled?”
“Yeah, that’s right. HBF.”
“Does this chart even make sense...? How is it going up again today?”
“Tell me about it. It’s already up 250% from the offering price. That bastard Assistant Manager Lee really got a gem listed.”
It was 3 p.m., with the market close approaching.
The domestic team’s portfolio managers were deep in conversation about HBF. Lately, the hottest topic within the pension fund was none other than the heroic tale of Lee Sejun, who had written a listing legend.
“I heard he tore up the MOU he got from Tyson and immediately shoved an MOA in their faces. They say Professor Park nearly fell over in shock.”
“His valuation doubled in just a few hours. How could he not fall over? Heh heh.”
“If a securities firm offered to double my pay, I’d run up to Seoul in my socks. Heh heh.”
Calling HBF’s listing a success story would not be an exaggeration. It had nothing to do with semiconductors, and yet they had made a profit from venture investing, the very thing the pension fund hated most...
The outlook was not bad either.
HBF had shown a stable share-price trend for three weeks in the IPO market, often called a legal gambling den.
On top of that, the Ministry of Science and ICT had announced smart farms and foundational cultured-meat technology as part of its ten major future industries. Even the Ministry of Agriculture, Food and Rural Affairs made a similar announcement, and related theme stocks were already stirring. At this rate, the HBF case might appear as teaching material at next year’s training session.
“I’m jealous of the overseas division... I heard they made a killing on raw materials too.”
“Seriously. I wonder how much incentive bonus they’ll get?”
“At the very least, they’ll give it in the thousand-percent range. If they hand out a mere cash bonus after results like this, I’m walking out.”
“Damn it! Why is the KOSPI always like this?”
The domestic division was gloomy.
In the United States, even with inflation exploding and interest rates soaring, the Nasdaq remained solid, while the Korean market fell even when rates were frozen. Not even Nobel Prize-winning economists would know the cause.
And just as the market closed after they had wasted time like that, news like a bolt from the blue struck them.
The domestic equity team leader, rushing into the office in a panic, spoke with a grave expression.
“Everyone, listen up. I’ll keep it brief. Anyone with time today, stay on duty.”
“Y-yes?”
“The Fed has hinted at another rate hike... The foreign exchange team is in a state of emergency right now, so let’s help them out.”
*
“Tell Assistant Manager Lee to come to my office.”
After curtly hanging up the phone, Director Oh tried to suppress his anger as he picked up the report the bastard had submitted once again.
Pavil, who had maintained silence for days, had hinted at a rate hike for the first time today. Because of that, the investment management headquarters had gone into full emergency mode, and Sejun’s report—submitted as if he had been waiting for this exact moment—finally snapped his patience.
It seemed he had been indulging him too much lately.
Even monkeys fall from trees in this business. He intended to make sure the guy understood that there were plenty of investment ghosts in this world—ghosts who had once seemed infallible, only to be ruined in a single blow.
“You called for—”
“Hey, Assistant Manager Lee!”
Director Oh’s eyes blazed.
“Why can you never stay quiet? As soon as one job is wrapped up, you cause another incident, and once that’s cleaned up, you cause yet another one. How long are you going to keep this up?”
“Director...”
“Shut up and listen to me first. There are truckloads of people in this world who predicted the IMF crisis, who predicted subprime. But the investment world is where people collapse in an instant. You can’t just make aggressive investments. You have to be cautious too.”
“...Director, this is unfair.”
“What?”
“Strictly speaking, I’m a victim too. With the Fed raising rates at that speed, how could we not respond to the market?”
“You, you little...”
“Please at least hear my explanation.”
Director Oh was trembling with anger, but he could no longer snap at him.
The guy only ever said things that made no theoretical sense, yet in the end, he was always right.
Perhaps the reason Director Oh was angry at the report he had submitted was because he feared that this, too, might end up being correct.
“Fine. Explain it, then.”
“The Fed hinted at a rate hike. Defying everyone’s expectations...”
“Yes, defying everyone’s expectations, it hinted at a big step. I thought 4.0% would be the final stop, but now it looks like it’ll rise to 4.5%.”
“Yes, that’s right.”
“But the Fed is the one raising rates, so why are you saying Chinese real estate is in danger? Do you know what companies your sell report is about?”
Director Oh pointed at the report as he spoke.
“Pengda, Wanke, Bigui! These are China’s top three construction companies. And given the unique structure of the Chinese economy, you know these are practically state-owned enterprises, right?”
“...”
“On what grounds are you saying we need to sell all the bonds, stocks, and even real estate tied to these construction companies?”
Director Oh had every right to be angry.
China was the pension fund’s second-largest investment destination after the United States, and a considerable amount of money was invested there. But recently, the Shanghai, Shenzhen, and Hang Seng indices had fallen into a slump, causing losses in the hundreds of billions. Selling the assets now meant taking those losses.
Of course, if the companies collapsed like in the SB incident, it would be a profit rather than a loss, but this time, the sell report was utterly poor.
“Excessive concern and speculation—in short, just panic selling! That’s my impression of your report.”
“Director...”
“Don’t even think about bringing up the SB incident. The U.S. could handle a 300-trillion-won bank because it has the size to do so. Do you think China is in that weight class?”
“...”
“And if you add together the scale of the companies you’re telling us to liquidate, it’s several times SB. Do you think China would let giants like these die?”
Sejun hesitated for a moment, then continued.
“...Please just look at the indicators. Right now, unsold housing is overflowing in China’s regional cities. Real estate hit bottom due to the impact of high interest rates from the U.S., and yet the U.S. raised rates again. Then these construction companies will eventually suffer from a funding crunch... and even China won’t be able to save giants this big.”
Director Oh picked up a paper beside him with an unimpressed expression.
“Assistant Manager Lee, do you know what this is? It’s the real estate status of each country released by the IMF. And if you look at this, there isn’t a single country where the real estate bubble isn’t deflating right now.”
“...”
“Like you said, let’s look only at the indicators. Europe, Canada, and Australia are already down 30%. Even Japan’s housing prices are falling, aren’t they? If we go by indicators alone, China is actually holding up fairly well. Compared to Germany, which has posted negative growth for two straight years, it’s practically a land of opportunity.”
“...”
“Then why is China the only one that’s doomed? Why is Chinese real estate more dangerous than Europe, where the potential growth rate is in the zero-percent range?”
Sejun spoke in a voice that nearly disappeared.
“...You must not trust the statistics released by the Chinese authorities.”
“What?”
“You have to go there in person, see it with your own eyes, and judge by the atmosphere. It’s probably very different from the statistics...”
Director Oh was so furious his hands trembled.
The guy was always like this.
Theoretically, he only recited things that sounded close to delusional. Yet in the end, they were always right.
“Haa...”
Should he trust him again this time?
*
“You’re saying they were manipulated?”
“Yes. It’s still just a guess, but...”
“That sounds like too much speculation to me. The IMF isn’t stupid. They would gauge the state of real estate through all kinds of comprehensive indicators, so how could China fool them?”
“With all due respect... during our own real estate bubble, our government also understated the statistics.”
“...”
“Even we did it, despite having a fully open market. There’s no reason China couldn’t.”
The division head leaned back against his chair and rubbed his temples.
When on earth would this disaster end?
The U.S. benchmark interest rate, which he had thought was at its final stop, had finally reached 4.5%, and yet another tsunami was coming.
Of course, he had been prepared. He had long expected that if the U.S. benchmark rate went wild, somewhere in the global economy would suffer major side effects.
But to think it would be China, not Europe.
“Even so, I find it hard to believe. The construction companies mentioned in the report are practically joined at the hip with the Chinese Communist Party. A significant amount of political money must have flowed through development favors. You’re saying the Party won’t clean this up?”
“It’s not that they won’t. It’s that they can’t. They don’t have the capacity...”
“That’s strange. When you first saw this report, I imagine you thought the same as I did... So why are you taking the lead in persuading me?”
“I’m not trying to persuade you. To be honest, I’m still 99% certain this report is wrong. However...”
“However?”
“I also suspect the Chinese authorities may have tampered with the statistics. It’s a country more than capable of doing that.”
“So?”
“I’d like to go there in person and get a feel for the situation. Once I can make the calculations, I’ll tell you what position we should take.”
The division head closed the report.
“You’re saying you want to go yourself because you need me to introduce you to people?”
“Yes. Someone who knows the local situation well, someone who will speak honestly, someone with solid guanxi... We’ll need various connections.”
“But can that be done in just a few days?”
“First, I want to personally verify the unsold housing rate announced by China’s National Bureau of Statistics and the actual unsold housing rate. If the statistics are roughly similar, that would be fortunate, but if there’s an excessively large gap... we’ll have to sell in stages.”
Had they lied or not? And if they had, by how much?
If the discrepancy was large, they had to sell the bonds and stocks first. From his experience with subprime, once real estate stumbled, it collapsed completely before there was even time to do anything.
“All right... Well, there’s no harm in confirming it with your own eyes. Are you going with just that guy?”
“Yes. I don’t think there’s any need to bring many people.”
“But listen. To verify the statistics announced by the Chinese authorities, wouldn’t you have to go through every single local government? Is that even possible? Isn’t that just banging your head against a wall?”
“It will be difficult, but we’ll do as much as we can. I also feel uneasy simply trusting China’s statistics as they are.”
Director Oh’s firm answer made it clear that he had already made up his mind.
The division head rummaged around and took out a business card holder, then carefully flipped through it.
When he had selected three business cards, he handed them to Director Oh.
“I’m sorry, but I don’t have anyone in my network who both knows the local situation well and is honest. Instead, these three have fairly solid guanxi.”
The list the division head handed over consisted of people from the Ministry of Trade, Industry and Energy and the Ministry of Foreign Affairs—China hands who had either served as ambassador to China or handled trade with China.
“I’ll contact them in advance. You explain clearly what kind of people you want to meet.”
“Yes. Understood. But Division Head, who is this person...?”
“A local Chinese contact. Back when the Korean Wave ban was issued, this was the person who told me before anyone else. Thanks to him, I knew three days in advance. But he’s not in the real estate industry, so I don’t know whether he can connect you to the kind of people you want.”
“I see.”
“Still, his guanxi is solid. He’s fluent in English, so there shouldn’t be any problem communicating.”
Director Oh nodded and stood.
“Understood. Then we’ll depart as soon as possible.”