Jeonju NPS Headquarters.
The risk management meeting held Monday morning wrapped up in a cordial atmosphere.
Risk meetings at the pension fund had been in good spirits lately. Apart from the social unrest in the United States, the Nasdaq was still at record highs, and with the semiconductor supercycle, the domestic stock market was looking toward the 4,000 mark as well.
The headquarters chief asked Manager Oh, who was sitting alone.
“The mood has been excellent lately. How’s Hoam Electronics doing now?”
“It’s on the verge of becoming a 100,000-won stock. Judging from the recent atmosphere, I expect it’ll break through without much trouble. Hynix goes without saying.”
The hottest topic currently sweeping the domestic stock market was, of course, “Stargate.”
To put it simply, it was like an AI beneficiary stock. When CEO Altman visited Korea and placed orders for HBM contracts worth 100 trillion won, Korea’s leading semiconductor stocks soared without knowing where the sky ended.
But even that was only like getting misted by spray from a hundred meters away from the waterfall.
Taiwan, which supplied even more core components than we did, hadn’t merely seen its stock market rise—its GDP had grown by a full 5%. It was an age where even the slightest brush with AI could make people filthy rich.
“Well, this is something... The fact that there’s no risk is itself a risk.”
“Exactly. When I think back to the dot-com bubble, no matter how dominant a trend is, there’s always one harsh winter that comes.”
At the end of the twentieth century.
Many experts predicted that the world would soon run on computers and the internet. And that prediction proved correct down to the last detail.
But because of the sudden rise of “IT skepticism,” global stock markets were smashed to pieces, with not only MS but even Amazon plunging by 95%.
As a result, there were more and more rating agencies taking a negative view of the AI megatrend.
They said it was certainly promising, but the market had overheated far too much.
There had been many reasons why IT companies faced mass extinction back then—low interest rates, venture companies sprouting up like mushrooms after rain, the boom in capital, and so on. But the biggest reason among them was clear: they had no definite profit model. And the AI developers of today had no companies turning a profit either.
Perhaps now was precisely the perfect opportunity to change one’s fate.
Michael Burry, the protagonist of the film, gained astronomical wealth and fame as the man who predicted subprime. The stock market occasionally hands bundles of money to pessimists like that.
Of course, if the prediction is wrong, one’s fate changes in the bad sense.
On Wall Street, there are countless people who made one bad bet and ended up destitute.
“Manager Oh. How’s our portfolio?”
At the headquarters chief’s question, Manager Oh handed over the documents.
“It’s perfect. Maybe because this is a market where anything you buy goes up, not a single one of our employees has failed to make a profit. Among them, Team Leader Lee Sejun’s portfolio performed the best.”
“What is this...? This isn’t merely good performance. It’s just overwhelming.”
“Yes. It’s as if he’s possessed by the ghost of someone who died because they couldn’t buy gold. He keeps increasing the ratio of raw materials purchases. His stock asset portfolio is good too, but his safe asset portfolio is so overwhelmingly strong that overall, he’s simply the best.”
The price of gold had gone insane lately.
In a low-liquidity market where even a 1% move would be called a surge or plunge, it had risen by 6% overnight.
According to investment guidelines, the pension fund managers had to distribute risk across low-, medium-, and high-risk assets. Yet that guy’s low-risk asset performance had far surpassed the high-risk asset returns of everyone else.
“Does this make any sense...?”
“When the others were buying bonds, this guy bought only gold. If this performance continues, the pension fund’s return next year may reach 30% as well.”
Such good news continued for quite some time, but the headquarters chief’s expression hardened at another document Manager Oh handed him.
“I simply can’t understand it... Why is a guy with such good performance telling us to buy this again?”
Not everyone in this world can live well.
Even amid this unprecedented boom, there were problem-child stocks that continued to struggle.
The problem was that the guy with the best investment performance in the pension fund kept insisting they buy them.
“Exactly...”
“Manager Oh, why don’t you try stopping him?”
“As if he listens to me. From watching him closely from the side, his portfolio has always been this extreme. He makes money in the most promising places and loses it in the places with the bleakest outlook, you could say...”
The list of problem-child stocks Sejun recommended once again included steel stocks.
The scale was large too. He had stated that he would use trillions of won to buy on the open market and purchase shares in paid-in capital increases. In the current situation, it could only be called insane.
“No matter what, this makes no sense. After the U.S. tariffs, now Europe has announced steel tariffs too. Pohang has already been a ghost town for a long time.”
“With all due respect... apparently that’s the biggest reason for making the investment.”
“What?”
“He says that the importance of steel as a strategic asset won’t change, to the point that even Europe is protecting its own market.”
“So what? Even in the long term, we won’t be able to compete with China on unit prices.”
“That’s why the government announced a large-scale R&D budget, didn’t it?”
“Isn’t that like pissing on a frozen foot?”
“That may be true, but... Director, he’s not someone we can stop anyway, so why not just trust him this once? Even Europe recognizes steel as a strategic asset, so I don’t think our government will let it go bankrupt either. Most importantly, even if we support this investment, Team Leader Lee’s performance is still overwhelmingly first place.”
The headquarters chief clicked his tongue.
He couldn’t understand it at all, but that last statement was something no one could refute.
In the end, he held out the approval documents and said,
“But this is the last time. When that guy gets back from China, you make a definite choice.”
Manager Oh smiled and bowed his head.
“I’ll try.”
*
Hilton Beijing.
As I was chasing away my morning drowsiness with the fragrant aroma of coffee, startling news came from the other side of the world. It was breaking news from CNN that the EU had imposed massive tariffs on foreign steel.
These days, when Donald was slapping tariffs even on Russia, one might wonder what was so remarkable about this tariff news. But in fact, it was quite significant. Europe, which had maintained a neoliberal stance all this time, had begun protectionism in earnest.
“Are you watching the news?”
While I was engrossed in the news, Prime Minister Lee Chanho approached me with his bodyguards in tow.
I had been specially picked up and brought here for his attendance at Victory Day. Thanks to that, I had the luxury of riding on a chartered plane and receiving protocol treatment.
“Looks like something urgent has come up. Did I call you out for nothing?”
“No, sir. Whatever the news may be, it can’t be more important than an occasion like this.”
“That’s why I specially called you here. You’ll have to put in a good effort, all right?”
“Yes. Korea’s investment capital and China’s labor force have many fields where they can cooperate. I’ll do my best.”
He smiled in satisfaction, then sat down and looked at the news.
But as CNN continued pouring out reports about steel, his expression gradually hardened. It seemed Pasko had come to mind.
“Team Leader Lee. What’s the atmosphere in Pohang like these days?”
“...I’ve heard it’s very difficult. The hiring market has died because of the cold spell in the steel industry, and as a result, the local commercial districts and real estate market are in an overall crisis as well.”
“Then I wonder if there’s any point in the government spending on R&D. If Europe follows the U.S. like this, what are we supposed to do?”
In the recent global climate, every time you turned on the news, it was nothing but tariff stories.
The EU had decided to cap foreign steel at 50% and impose high tariffs on volumes above that. In truth, this policy was aimed at Chinese steel, which had seized a 30% share within Europe, but Korea inevitably had no choice but to be hit by the shrapnel as well.
I smiled carefully.
“With all due respect, Prime Minister, that isn’t such bad news for us.”
“What are you talking about? Domestic steel deliveries to Europe amount to six trillion won. How is that not bad news?”
“Our deliveries to Europe are 3.8 million tons, while China’s are 100 million tons. The EU authorities’ detailed regulations will target China far more than us.”
The current global community had a common problem.
China’s outrageous dumping. Currently, Chinese steel was oligopolizing the global supply chain at nearly half price, and because of that, every country was racking its brains.
If my memory was correct, Europe would reduce Chinese steel to 20%—20 million tons—and the blow would not be small.
“Is the market... moving that way?”
“Yes. That’s why we aren’t simply at a disadvantage in these negotiations with China either.”
“What does that mean?”
“Because of their iron-fisted rule, not a single groan comes out from within China, but in truth, they’re the ones in greater urgency. They can’t absorb their own steel volume.”
In truth, China’s low-price offensive had become severe not because the Chinese authorities had some highly sophisticated plan to systematically destroy the entire global supply chain and monopolize the market. They were simply in trouble too.
The Fengda bankruptcy incident was still exerting its influence.
Since it was such an honest country(?), the official statistics could not be trusted at all. But according to MSCI’s own investigation, there were as many as seven million unsold apartments within China, and including vacant commercial units, the number was calculated to reach sixty million.
Of course, each expert had a different method of calculation, so there was a large gap from reality. But even the Chinese authorities could not deny that Chinese real estate had been falling for forty-one consecutive months, so the figure of sixty million vacant units likely wasn’t entirely wrong.
That was why the price of steel had fallen.
Steel was generally used 40% in construction, and since China couldn’t absorb that volume through domestic demand, it had led to a dumping attack.
Of course, if it were a country with common sense, it would leave things to market logic and help the steel industry undergo healthy restructuring. But the Chinese authorities seemed to view this as an opportunity for ascendance.
Raise their current global market share of 55% to around 70%, drive all other countries’ steel industries to ruin, and then raise prices later to recoup the losses... That seemed to be the Chinese authorities’ calculation.
“Then shouldn’t we consider tariffs on steel too?”
When the long explanation was over, Lee Chanho asked that. But I shook my head.
“Tariffs are the worst policy. Indirect support through R&D is the best option for now. Of course, that’s just my personal opinion.”
“Why? One brings tax revenue into the government, and the other requires us to pour money in.”
“Scholars differ in how they see it, but... I’m a market economist who believes tariffs are unconditionally bad. I think anything that affects the price of finished goods is bad. It inevitably puts us behind in global price competition.”
In truth, I didn’t remember exactly how long Europe’s steel tariffs would continue. But I did clearly remember one thing: tariffs were an own goal.
Lee Chanho smiled bitterly and set down his teacup.
“The neoliberal fad ended long ago, yet here we still have a believer.”
“Heh heh...”
“You know that after tomorrow’s schedule, there are negotiations with their economic authorities, right?”
“Yes, I know.”
“I’ll be looking forward to it. To what you give up, and what you bring back.”