‘Now this is one hell of a tense atmosphere...’
Yeomimgwan, the Blue House.
The securities people gathered in one place waited for a man with nervous faces.
Today was an extremely important day. It was no exaggeration to say that the president’s fate after leaving office would depend on the portfolio we put together.
In truth, there had been several theme funds led by the government before.
The Green Fund that began under MB, and most recently, the Materials, Parts, and Equipment Fund... There had been funds created because a leader foresaw future growth engines, and funds pushed forward for certain political reasons.
Put that way, one might think that growth funds without political intent had good returns, while funds with political intent went bust, but sadly, the market is honest.
Among past government funds, the one with the highest return was the Materials, Parts, and Equipment Fund, with returns of roughly 40 percent. The secret was investing in the two semiconductor giants.
As expected, it seemed investing money in the “ones that will make it” was best.
On the other hand, the MB administration’s Green Fund, which had almost no political intent, a clear agenda called “the environment,” and even aligned with the future vision of the global community, recorded a historic return of -20 percent. Apparently, he used up a lifetime’s worth of luck during Cheonggyecheon.
“The prime minister is entering.”
Just as we were only wetting our throats with water, Prime Minister Lee Chanho arrived.
“Ah, there’s no need to stand. Today, I’m the one who should be hosting you all. Haha.”
With a generous smile, he approached each person one by one and exchanged greetings.
“It’s been a long time, Director Choi.”
“Yes, Prime Minister. Have you been well?”
“I heard you left NK and went independent?”
“Yes. I gathered some like-minded people, and we’re making somewhat aggressive investments.”
“How are the returns?”
“To be honest, who isn’t making money these days? With the government doing so much to boost the stock market. It’s all thanks to the president and you, Prime Minister. Haha.”
“Thank you for saying so. My goodness—CEO Oh, you’re here as well?”
The ten people gathered here all had impressive careers.
Some had served as executives at asset management firms, some ran private equity funds in the hundreds of billions of won, and some were scholars retired from the Bank of Korea.
“My goodness—Team Leader Lee, you came too?”
“Yes, Prime Minister. It’s been a long time. Haha...”
Naturally, every eye in the room turned to me. No matter how you looked at it, I probably didn’t seem like I had any reason to be here...
“If everyone is here, let’s begin the meeting.”
And so, once the meeting began, the warm atmosphere turned murderous again.
“Since everyone here knows the situation, I won’t give a long explanation. We are finally moving forward with the National Growth Fund, one of our administration’s presidential campaign pledges. The purpose is this: to put the money sleeping in real estate, deposits, and the like to use in productive finance.”
Lee Chanho spoke with a solemn expression.
“But there are far too many voices of concern from some quarters. Hasn’t the market already risen too much—can it rise further? Recent performance may be good, but before that the KOSPI was a Boxpi; does it really have growth potential? Those sorts of worries.”
“Yes, yes.”
“However, the president and I still believe our companies have boundless potential. So today, I would like all of you to discuss the optimal portfolio that will allow the people to make as much money as possible. Does anyone have an opinion?”
No sooner had he finished speaking than a man seated at the head of the table raised his hand.
“Prime Minister. Semiconductors. It must be semiconductors, no matter what.”
Lee Chanho turned his head toward the man, who spoke as if he had come prepared.
“Are you saying semiconductors should make up the largest portion?”
“That is correct. In truth, if the goal is returns, then we must approach this strictly according to market logic. Looking at past government fund cases, the one with the best returns was the Materials, Parts, and Equipment Fund, and that portfolio was heavily concentrated in our semiconductors.”
“Hmm...”
“The same goes for the market outlook going forward. Recently, even though all the big tech companies posted earnings surprises, the Nasdaq plunged. The reason was their announcement that they would further increase investment in AI facilities.”
“Didn’t that have a considerable effect on our KOSPI as well?”
“Yes, it was an unjustified grand bargain sale. But what does it mean that big tech companies’ facility investment will increase?”
“That’s right, Prime Minister! No matter how you look at it, semiconductor supply and demand will become even tighter going forward.”
“U.S. tech stocks have no choice but to grow! Then naturally, we should compose the portfolio around stocks that will benefit from that!”
The stock market is truly mysterious.
Even when earnings exceed expectations, and even when future guidance is bright, stocks fall. Recently, every big tech company announced revenue that had exploded compared to the previous year, yet they dropped helplessly.
The reason was that they said they would increase investment in AI facilities. As the scale of investment grew, that in turn fueled the theory of an AI bubble. But on the other hand, because AI could lead to the mass layoffs of all software workers, other tech stocks also plummeted.
Then what tune are we supposed to dance to...?
If AI is a bubble, then it’s good because developers won’t lose their jobs; and if developers lose their jobs, then it’s good because AI isn’t a bubble, isn’t it? As expected, the market was unknowable, so perhaps the only answer to making money was long-term dollar-cost averaging.
“...”
But even in a market where bubble theories surfaced periodically like this, one thing was certain.
There were no semiconductors. It seemed the next beneficiary after GPUs was CPUs.
At present, big tech companies were taking numbers and waiting for our HBM market, and thanks to that, even as the Nasdaq repeatedly surged and plunged, our KOSPI soared without a care. It seemed the KOSPI was no longer so frail that when America sneezed, Korea caught pneumonia.
I searched my memory. But how many years did this go on again...?
“Good. It seems everyone’s opinions are similar.”
The prime minister summarized the opinions and spoke.
“However, there is one thing I would like to ask of you. The National Growth Fund—yes, returns are important. They are important, but since this is being promoted by the government, I do not want to look only at returns. For your reference, the president has recently been very concerned about the K-shaped rebound of our stock market and polarization. So, committee members, even if there is risk, please diversify the portfolio so that these benefits can reach our companies that appear to have vision.”
After saying that, he turned his head.
“I have gone on too long. In truth, today, you all are the main characters, not me. Have you all exchanged greetings?”
“We all know each other already. Haha.”
“I see. Haha. Then there’s no need for a separate introduction session, is there?”
“Yes, that’s right.”
“Then this must be the only thing you need.”
Lee Chanho smiled gently and rose from his seat. After he stood, a single card was left on the spot where he had been sitting.
“It is a business promotion expense card given by the president. The limit is unlimited.”
“Haha.”
“Ah, and one person has not arrived today. He has an overseas schedule, so he will be a little late. He is the one who will serve as head of the TF, and he will probably arrive in an hour. Please talk comfortably among yourselves.”
“Yes, understood!”
*
“So basically, he wants us to build a portfolio that has good returns while also letting the benefits reach small and medium-sized companies?”
“Yes, that seems to be the case.”
“They sure want a lot. Back in the Boxpi days, they were saying, ‘At least let semiconductors go up,’ and now they’re saying, ‘Let other things besides semiconductors go up too.’”
“They say it’s a national policy task. We should be understanding. Hahaha.”
After the brief meeting ended, the gathering of players(?) began with everyone talking behind the prime minister’s back.
It was a difficult order. Returns naturally had to be good, and as a side effect, our small and medium-sized companies also had to be saved. How could that be as simple as it sounded?
“Since it’s just us here, let’s speak comfortably. Director Kim, what do you think?”
Choi Hoyeong, the oldest among us, spoke.
Having served as a managing director at NK, the largest asset management company in the country, he was one of the top investors among those present.
“Well, Senior Choi, you and I are thinking similarly. We absolutely have to focus on semiconductors.”
“But aren’t you somewhat stability-oriented?”
“Even to someone like me, right now seems like the time to break your savings account and buy semiconductor stocks.”
“Even so, we can’t hold the entire portfolio in stocks. Recommend some safe assets for risk diversification.”
“My goodness, Senior, to be honest, Korea has no such assets. Government bond yields are in the two-percent range right now; you lose money just by holding them. If risk really worries you, a split of seven parts aggressive assets and three parts option selling would probably be safer.”
“You’re saying we should go with a covered call strategy?”
“The KOSPI does feel like it has risen sharply, and it’s true the Nasdaq has been faltering. Of course, it will trend upward in the long term, but touching bonds now in the name of risk management is effectively a loss. If we really want to prepare against risk with bonds, we’d have to turn our eyes overseas, but the government would oppose that.”
Since the purpose itself was “boosting the domestic stock market,” the conditions for this growth fund were strict.
Most of the assets had to be invested domestically. But because government bond prices were cheaper than those in the U.S., one had to buy B-rated corporate bonds to make any real money.
“I see. Well, I’m fine with an option selling strategy too. Then the real problem is stocks outside semiconductors...”
Choi Hoyeong sighed.
“What do you all think?”
“Senior, let’s just make it look like we’re doing it.”
“Make it look like it?”
“No matter how hot the KOSPI is, only the stocks that are rising are rising right now, aren’t they? In particular, with AI’s rise, even the country’s largest portal stock has been sluggish. So let’s just select a few subcontractors of Hoam Electronics and make a show of it.”
“Mm... Is that all right?”
“Why wouldn’t it be? The Materials, Parts, and Equipment Fund barely invested any money in SMEs either. Most of it went into the two semiconductor giants. But is anyone complaining?”
“As long as we make them money, that’s enough?”
“Yes. Rather than awkwardly picking things up on the KOSDAQ, it’s better to use that money to buy even one more tech growth stock. Well, for risk diversification, we can invest in finance, insurance, and public enterprises.”
“That’s right. For this kind of fund, making money is all that matters.”
Just as everyone’s opinions were settling in one direction, I cautiously raised my hand.
“Director Choi... My thoughts are a little different. Returns are important, but since the purpose is to vitalize domestic companies, what about investing in KOSDAQ technology stocks?”
“Hm? Who are you?”
“I’m Lee Sejun, risk team leader at the Pension Fund. Actually, before coming here today, I looked into various things, and there are quite a few decent companies and growth sectors on the KOSDAQ. If you could just review this once—”
“My goodness, have you all been well?”
Before I could finish speaking, the head of this TF whom Prime Minister Lee Chanho had mentioned arrived late.
“Welcome, Director.”
“It’s been a long time. Why are you only arriving now? Haha.”
“I heard you retired and washed your hands of investing. I suppose that wasn’t the case?”
While everyone greeted the man warmly, I froze like a stone statue.
“What’s this, Lee Sejun? Why are you here? Huhuhu.”
Director Park Seongcheol, who had rammed himself into the pension reform bill and been forced into retirement, was the head of this Win-Win Fund TF.