“Um... Chief Oh?”
After the meeting ended, I cautiously approached Chief Oh. He looked me over once, then answered indifferently.
“With this, the debt’s paid?”
“...Pardon?”
“Let’s call it even. That day when I chewed you and Team Leader Choi out.”
“Ah, so that’s what this was about.”
“What else would make me stick my neck out for you? ‘He’s number one in returns, so he must be right’... Even thinking about it again, that was damn embarrassing.”
“I’m hurt. I thought you’d finally recognized the potential of defense stocks.”
“You little—!”
With one smack on the back, the small bit of bad blood between Chief Oh and me was settled.
In truth, it wasn’t even bad blood. Right before this incident broke out, KAI had seen talk of privatization surge due to the accumulated deficits from the COVID period, and Korean defense stocks had been hitting rock bottom day after day, making the news of self-propelled artillery exports look meaningless.
Since I had been buying up things like that like a rat in the shadows, how could he not have been angry?
“The problem is what comes next.”
When we arrived at the chief’s office, he loosened his tie with a dark expression.
“China’s in a slump, Europe isn’t promising, and the U.S. has risen too much... So I built the portfolio mainly around energy countries, but now even Russia is causing trouble? Damn it, where the hell are we supposed to invest now?”
In truth, the 800 billion won in Russian assets—no, now the 400 billion won—wasn’t that large an amount for the pension fund.
The reason the division head immediately ordered a sale was probably because, while the amount wasn’t huge, the risks that had to be considered were mountainous, so he decided to cut losses.
But the impact this situation would have on global stock markets was beyond imagining.
If there was no natural gas, what would happen to the European market? And then what would happen to the U.S. market? And depending on that, what impact would it have on the domestic market...? A macroeconomic complex system I truly did not want to imagine had unfolded before us.
“Will a war really break out...?”
He asked as if muttering to himself, and I answered.
“It already has.”
If my memory was correct, there would be no fourth warning.
Despite the United States’ third warning, Russia carried out its invasion. Every military expert predicted it would last a week at most.
But the Russian army, which had seemed overwhelmingly powerful, was miserable, and the Ukrainian will to resist, which had been thought weak, was hotter than expected. As a result, the front lines on both sides turned into a war of attrition, and the international situation fell into a labyrinth... As expected, perhaps there was no meaning in trying to predict a macroeconomic complex system.
“What the hell makes you so confident about everything?”
“That’s just how the situation is. The White House wouldn’t have issued warnings over simple troop movements alone. All of their intelligence lines must be saying the same thing, so they likely announced that war was imminent based on a comprehensive assessment.”
“Then Ukraine will be annexed soon? Damn it, then what happens after that? Europe might be able to impose more financial sanctions, but they won’t be able to give up natural gas... Should we dispose of European stocks in stages too? No, then is even the Nasdaq safe?”
“Cash would be the safest if possible. Chief, how much do we have in cash-equivalent assets?”
The moment cash came up, Chief Oh let out a deep sigh.
“Don’t even ask. It’s at an all-time high. We’re holding 60 trillion won in cash alone, and another 40 trillion won in bonds nearing maturity.”
“That’s a relief.”
“Relief, my ass. Out of 800 trillion won in pure fund management assets, one-eighth is sitting idle. At this rate, we’ll be in the news again. ‘The depletion point is approaching, yet the pension fund’s investment performance is terrible.’”
The pension fund’s return for this year, as recently tallied, was -7%.
It was no wonder. After COVID, bad news had broken out every time one opened one’s eyes, and at the very end, Russia had driven in the final nail... Compared to global sovereign wealth funds, this level of return was actually close to the upper ranks.
“At least thanks to you, we probably raised it by 0.5%. Money that should have been lost wasn’t. That’s probably why the division head trusted your intuition.”
“It’s all thanks to you always taking my side, Chief... But why didn’t you reinvest?”
“Look at the market conditions. Where are we supposed to invest?”
Chief Oh’s voice rose slightly.
“One side has risen too much, another has fallen too much... and now even Russia? Even the Nasdaq, which had at least been giving us returns, is on the floor. Ugh... You wouldn’t have been able to do anything either.”
“Chief, then what about defense stocks?”
“Defense again?”
“The growth engine is clear now. It’s not too late yet.”
Chief Oh sighed. But unlike before, there was no sign of him shouting in a rage.
“To be honest... I’m considering it. But the five major defense stocks, including Lockheed, have risen 40% in just a few weeks. During Crimea, they briefly shot up and then plunged, you know? Won’t it be the same this time?”
“They’re still cheap. If the U.S. feels burdensome, consider Europe as well.”
“Forget it. Europe wouldn’t raise defense spending even if Poland were annexed, never mind Ukraine. They didn’t raise it after Crimea either, did they?”
“This time will be different.”
Chief Oh stared at me.
“If I ask what’s different, you’re going to say it’s that damned intuition of yours again, aren’t you?”
“Chief...”
“Fine. Just say it all.”
“Pardon?”
“With the pension fund’s return at -7%, who’s in a position to teach whom? You, who made 30% on the KOSPI, are probably more right. Just say everything. This time, I’ll really listen without prejudice.”
I studied his expression. But this time, he seemed sincere.
“Low-risk assets... If you’re prioritizing stability, then gold. There’s nothing as safe as that while still guaranteeing returns.”
“We already bought 2 trillion won’s worth. It’s up 40% from the purchase price. It’s at an all-time high—should we buy more?”
“In the current situation, is there anything safer than that?”
“Ahem, hm... All right. I’ll consider doubling the purchase ratio—no, even tripling it. What else?”
“McDonald’s, Coca-Cola, Walmart, Berkshire. Stocks at that level are as safe as gold in the current situation.”
Chief Oh raised an eyebrow.
“Stocks that don’t get hit by the economy?”
“Yes. Regardless of the international situation, these stocks will rise steadily. In a crash like this, they might be almost the only ones that go up.”
“Okay. We’re communicating well today. I’ll agree with you up to that point. What else?”
“For medium-risk assets... there’s really nothing but defense stocks. To be honest, I think we should buy more medium-risk assets than low-risk assets.”
“Manager Lee... They say you should prepare for the monsoon but avoid a sudden shower. In market conditions where we can’t see an inch ahead, wouldn’t an aggressive portfolio be dangerous?”
“It’s not aggressive at all. Rather, this is the safest. For nearly ten years, the defense industry has been in a dormant period. By any indicator, it’s set for medium- to long-term growth.”
After being deep in thought for a while, Chief Oh opened his mouth.
“All right. But our overseas team doesn’t put all its eggs in one basket, no matter how the market looks. What I can decide personally will be around 10 trillion won.”
“That’s enough. And, Chief, I have a favor to ask.”
“A favor? What is it?”
“Overseas defense is good, but domestic defense has potential too. If you’re thinking of investing 10 trillion won, please invest about half of it domestically.”
“...What would we be investing in domestic defense for? Even if war breaks out, European shells and tanks will be used anyway. Would domestic companies really get a special boom from that?”
To Chief Oh, who was pointing out only things that were correct in every detail, I had no choice but to recite the magic spell.
“...This time will be different.”
“You little—again! No... Fine, I said I’d listen without prejudice. All right, I’ll discuss it with the division head and decide. What else?”
“Lastly, for high-risk assets... sell U.S. and European stocks, including big tech.”
“What? Hey, I told you the pension fund has 100 trillion won sitting around. Another article came out last week. ‘Pension Fund Return -7%, the Main Culprit Behind Pension Depletion!’ We shouldn’t be selling—we should buy something and make up for it.”
“You just said it yourself, Chief. A sudden shower is something you avoid.”
“No, but...”
“This geopolitical risk isn’t something that will end in a month or two. If a real war breaks out, the U.S. market will also turn into a full-fledged slump.”
“Ha...”
“Buying up recession-proof stocks while disposing of the rest is the most conservative position.”
Chief Oh sighed and said,
“Fine... I’ll accept it without prejudice. I’ll discuss it with the division head and respond. But you... you know if war doesn’t break out, we’ll be the only fools, right?”
*
Geneva, Switzerland.
The chill of the Alps had spread even to the United Nations Office at Geneva today.
Sitting across from each other in rows, high-ranking U.S. and Russian officials glared at one another, radiating killing intent.
“Minister Ivanov. Is that truly the Kremlin’s will?”
“How many times must I say it for you to understand? It is the very clear will of the Kremlin.”
“Then I assume you are prepared for what will follow?”
“Prepared?”
“In 1994, we made a clear promise in Budapest. If Ukraine gave up its nuclear weapons, we would guarantee its security. But if Russia uses force like this, will other countries trust the NPT?”
Ivanov burst into laughter.
“It was the Western countries that broke their promise first. Why did you break your promise not to expand eastward?”
“We should already have conveyed our position on that through Europe. Ukraine’s NATO membership will be put on complete hold.”
“Trust, once broken, is difficult to restore in this way. We can no longer stand by and watch the neo-Nazi forces operating covertly in Ukraine.”
“Minister Ivanov!”
“Let us rise. The special military operation will be carried out tomorrow, and we have notified the United States one day in advance because of the missile treaty. I wish you fortune in war.”
As the Russian side stood, the U.S. secretary of defense struck the table and shouted.
“Minister Ivanov! If you tear up the Budapest Memorandum, Russia will be the one to suffer most! Every hostile nation and potential hostile nation of Russia will reach for nuclear armament! Keep your promise!”
Ivanov looked down at the American secretary with a contemptuous expression.
“Hypocritical nations. Tsk, tsk.”
“What?”
“The West is truly made up of hypocritical nations. Did you not also make a promise with Gaddafi? That if he gave up nuclear weapons, you would never interfere in Libya’s internal affairs.”
“That was...”
“But the moment he gave up his nuclear weapons, you seized Libyan airspace. If a third country arms itself with nuclear weapons, would it not be because of Western hypocrisy rather than because of us?”
“Minister Ivanov!”
“Spare me the excuse of democratization. After Gaddafi died, Libya produced a hundred Gaddafis.”
The American secretary shouted again at Ivanov’s back.
“That has nothing to do with Russia. This war has no justification!”
Ivanov stopped walking and turned his eyes to his aide.
“Dmitry. What justification did the United States use to invade Iraq?”
“Yes. The justification was that Iraq had developed large quantities of biological and chemical weapons.”
“Then why have they still not found them?”
“I wonder. Perhaps Hussein did not answer before he was executed.”
“Hahaha.”
Ivanov let out a mocking laugh and turned his head again.
“Secretary Roberts. Why does the West try to monopolize justice?”
“...”
“When you are, in truth, the vilest of all.”
The Russian side left the conference room, breaking into laughter, and the American side fell into a long silence.
Everything had become certain.
Ukraine would soon be annexed.