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CH101 | GSI
🕑 Added 2025-02-04 03:35:01 +0000 UTCJanuary 3, 1995
As the first trading day of the year approached, Seok-won gathered the senior employees of the trading department for a meeting.
"Last year, the KOSPI Index soared into four-digit territory, continuing its unstoppable rise. However, this year, the market is likely to be much more challenging."
"……?"
Seok-won’s words drew puzzled expressions from the executives. Experts, the government, and the media were all forecasting a bright outlook, yet he was presenting an entirely different perspective.
"You’re all aware that the driving force behind last year’s stock market boom was the influx of foreign capital following the market’s opening."
As the executives nodded in agreement, Seok-won continued.
"But now, entering the fourth year of market liberalization, most blue-chip stocks have already reached their foreign investment limits. In other words, while we’ve been benefiting from a flood of foreign capital, that advantage is now fading."
When the stock market first opened, the government imposed restrictions to prevent foreign investors from gaining control of domestic companies. Each stock had a foreign ownership limit of 12%, with stricter caps of 8% for state-owned enterprises such as Korea Electric Power Corporation (KEPCO) and POSCO.
Due to these regulations, once a company's foreign ownership limit was reached, investors couldn’t inject more capital into it, even if they wanted to.
"For the past few years, there were plenty of stocks with attractive valuations. So, when the limit was reached for one stock, foreign investors simply moved to another, making it a non-issue."
Seok-won briefly reflected on himself.
'That’s how the entire market climbed past the 1,000-point threshold.'
Indeed, foreign investors had been aggressively pouring in dollars, even into small-cap stocks, driving up share prices across the board. The Korean stock market, once experiencing a boom, was now showing clear signs of overheating.
"But now, it's becoming harder to find such opportunities. And foreign investors aren’t going to buy into problematic junk stocks. Expecting the same level of liquidity inflow as before would be unrealistic."
Seok-won spoke with certainty.
If foreign capital—the key driver of the market boom—slowed or dried up, the market’s momentum would inevitably weaken. The executives, well aware of this, now looked visibly concerned.
"On top of that, the global investment climate is turning cautious due to the Mexican peso crisis at the end of last year."
Since late December, the peso had been in free fall, plunging to 6 pesos per U.S. dollar.
The bigger issue was that the crisis was no longer confined to Mexico. Signs of contagion were emerging, threatening to spread to Argentina, Brazil, Chile, and other Latin American countries.
"If it stops there, we’ll be lucky. But if the situation worsens, global investors may start pulling their money out of unstable emerging markets altogether."
"……!"
The shocking revelation sent a wave of unease through the room, and the executives couldn’t hide their astonishment. A murmur of concern rippled through the group.
Then, one of the team leaders hesitantly raised a hand and spoke cautiously.
"Unlike Mexico, Korea has a strong economy and a thriving export sector. Do you really think something like that could happen here?"
His face betrayed both anxiety and a desperate hope that such a crisis was unthinkable.
"Of course, I’m not saying that foreign investors will suddenly pull out en masse. But since Korea has opened its market to the world, we can’t assume we're immune to financial shocks from abroad."
Seok-won’s gaze swept over the solemn-looking executives as he continued.
"So far, the stock market has soared thanks to foreign capital. But if that inflow slows—or worse, if capital suddenly exits—the impact will be far more severe and devastating than you might expect."
Seok-won muttered to himself, words he could never say out loud.
"They’ll learn just how ruthless and terrifying foreign capital can be when the IMF crisis hits."
Back then, sensing the looming crisis, foreign investors had dumped over 2 trillion won worth of Korean stocks and withdrew their dollars, sending the domestic stock market into free fall and further exacerbating the foreign exchange crisis.
A heavy silence settled over the room, the weight of the discussion pressing down on everyone.
Breaking the tension, Seok-won resumed speaking.
"Beyond that, the rapid rise in stock prices has led to market fatigue. We’re at a point where a slowdown—or even a downturn—could occur."
He then firmed his voice, issuing a clear directive.
"Given the uncertainty and turbulence both domestically and internationally, I want everyone to be extra cautious and deliberate with their investments."
"Understood."
"Yes, sir."
The senior executives were initially sceptical about whether a real crisis or market instability would arise despite the bullish stock market sentiment. However, unlike before, their faces gradually stiffened with tension as they answered.
For quite some time after that, Seok-won engaged in an in-depth discussion with the executives about the investment strategy for the first half of the year.
When the meeting finally concluded, Seok-won was the first to rise from his seat. The other executives followed suit, gathering their belongings and exiting the conference room.
"What’s he doing just sitting there?"
Team Leader Choi Ho-geun, holding his company planner, noticed his colleague and fellow recruit, Song Jong-geun, sitting across from him with a deeply troubled expression. Curious, he moved closer.
"Something on your mind?"
Jong-geun, still seated, looked up at him.
"Huh? What did you say?"
"You already look gloomy on a good day, but now you seem even more miserable. What’s wrong?"
Jong-geun let out a deep sigh before responding.
"You know how the new director—uh, I mean, the parachuted-in boss—put our team in charge of yen trading after taking over the PI operations?"
"Yeah, what about it?"
Recalling the conversation, Ho-geun asked, prompting Jong-geun to slump his shoulders.
"Because of the damn foreign exchange crisis in Mexico, the yen has skyrocketed over the past few days, and our losses are no joke."
"Huh? But why would something in Mexico cause the yen to rise?"
Ho-geun tilted his head in confusion. Jong-geun sighed and explained.
"Because global capital is pulling out of developing countries like those in Southeast Asia and rushing into Japan, which is seen as a safe haven. That’s making the yen more expensive."
"Ah, so that’s how it works."
Now understanding the situation, Ho-geun nodded with a short exclamation.
Japan was still one of the world's leading economic powers, standing shoulder to shoulder with the U.S., even though it had fallen into a deep recession following the burst of its economic bubble.
And since the yen was considered a quasi-reserve currency and a safe asset, it was natural for demand to surge during a crisis.
"So what’s the yen trading at now?"
"95 yen to the dollar."
"And what was your average selling price?"
"We shorted 400 million dollars' worth at 100 yen per dollar."
At those words, Team Leader Choi Ho-geun's eyes widened in shock.
"It jumped by five yen? Then how much is the loss?"
"Don’t even ask. Every time I check the numbers, I feel like my blood is draining."
Song Jong-geun replied weakly.
Now it made sense why, while everyone else was busy leaving the conference room, he had been sitting there, completely dazed.
'With losses this big, it’s no wonder.'
Ho-geun knew all too well the gut-wrenching feeling of seeing things take an unexpected turn and suffering a major financial hit. Naturally, his gaze toward his colleague was filled with sympathy.
"The real headache is that things are only getting worse."
Just as Seok-won had pointed out in the meeting earlier, Mexico's currency crisis was showing signs of spreading beyond its borders, potentially engulfing all of South America.
As a result, the global market’s appetite for safe assets was growing stronger, which meant even greater upward pressure on the yen—an outcome as clear as day.
"So, our team leader and I went to the director and suggested that as painful as it might be, we should cut our losses before things get any worse."
The losses were already significant, but knowing when to walk away was just as important as knowing when to enter a trade.
'There’s a saying—timing is everything when it comes to cutting losses.'
If they followed through with the plan, it would mark Seok-won’s first failure. But then again, no one could expect to succeed all the time.
Ho-geun, though slightly regretful, felt it was a reasonable course of action.
"You win some, you lose some. Don’t let it get to you too much."
He patted Jong-geun on the shoulder in encouragement, but his colleague shook his head, indicating that wasn’t the real problem.
"It’s not like this is my first day in the industry—I get it. But do you know what the director said?"
"What did he say?"
Jong-geun let out another long sigh.
"He said, ‘It’s not a loss until you sell.’"
"Huh?"
Team Leader Choi Ho-geun, who had naturally assumed they would cut their losses, couldn’t hide his shock.
"Not only that, but he even went a step further and called this a golden opportunity to increase profits—telling us to sell even more yen."
"Are you serious?"
"Why would I lie about something like this?"
Song Jong-geun clutched his head in frustration, looking as if he was about to lose his mind.
"So as soon as the market opened today, we sold an additional one million dollars' worth of yen."
"Oh my god."
Ho-geun was at a loss for words, completely taken aback by the unexpected move.
"And to make matters worse, he wants to use leverage to expand the investment. Can you believe this? Seriously, does this even make sense?"
"He's using leverage too?"
"Yeah!"
"Hmm..."
Ho-geun let out a low hum, his expression growing serious.
He was starting to worry that Seok-won, intoxicated by his streak of success, was overextending himself instead of pulling back at the right moment.
"At this rate, forget about a year-end bonus—we might be packing up and heading home for good."
Jong-geun sighed as he stared at the floor.
"You were just following the director’s orders. Why would you have to resign?"
"He’s the chairman’s son. Do you really think they’ll hold him accountable for the losses? No way. They'll just push the blame onto us powerless employees and wash their hands of it."
Seok-won didn’t seem like the type to shift responsibility onto his subordinates, but when push came to shove, who knew what would happen?
Worse yet, the higher-ups might decide to sacrifice someone else just to protect the chairman’s son.
"Damn it. I thought last year’s bad luck had finally ended but look at this mess. I stepped right into trouble at the start of the year."
Jong-geun grumbled in frustration.
"But the losses aren’t finalized yet, just like the director said. So don’t give up already. Who knows? Maybe the yen will suddenly crash."
Ho-geun, wanting to give Seok-won the benefit of the doubt, tried to offer a sliver of optimism. But Jong-geun just shot him a sharp glare.
"Do you really think that’s possible? Don’t talk so lightly just because it’s not your problem."
"Come on, you know that’s not what I meant!"
"Oh, please. Everyone knows how Investment Team 4 threw a bonus party last year thanks to the director. Don’t act like you’re not involved."
Looking at his colleague, whose nerves were clearly frayed by the mounting losses, Ho-geun couldn’t help but feel sympathy.
"You know, working under the director has taught me something."
"Yeah? What’s that?"
Jong-geun responded with little enthusiasm.
"His foresight is seriously impressive. On top of that, he has an uncanny sense for money."
"……."
"At first, it might seem reckless, but there have been more than a few times when he hit the jackpot later on."
Song Jong-geun looked slightly intrigued but still carried a hint of scepticism on his face.
"I admit he's incredibly talented, but that doesn’t mean he succeeds every single time."
"Of course not. But honestly, I just can't picture him failing."
"Wow, you’ve become a full-on devotee. Did you eat something weird?"
"No, I’m serious."
Choi Ho-geun spoke with absolute conviction.
"If the director is showing this much confidence, there’s definitely something behind it. So just trust him and do as he says."
Hearing that, Jong-geun, who had been doubtful, felt a flicker of hope rising within him.
"You really think so?"
"Of course. Just follow his instructions, and it'll be like money falling into your lap while you sleep."
"Sigh... I really hope you're right."
"Enough of this headache-inducing talk. Get up—I’ll buy you a coffee from the vending machine."
"Wow, big spender. You sure know how to flaunt a few hundred won."
Jong-geun grumbled but still picked up his planner from the table.
"Well, orders are orders. Nothing’s gonna change no matter how much I complain."
Feeling a bit reassured by his colleague's encouragement, Jong-geun patted Ho-geun on the shoulder.
"Forget the vending machine coffee. Just buy me a drink tonight."
"No way. My wife will kill me."
"Are you still being bossed around by your wife?”
"Hey, show some respect. Call her 'sister-in-law,' not 'your wife.'"
TL/n -
Does anyone remember what major event happened in January of 1995?
Comments
MMMCMXCIX, or 3,999
City of Kobe earthquake
