Chapter 32

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Translated by Heavenly Cat

Read it only at Novelbyu.com & Utoon.net

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“Department Head. Here’s the Hong Kong ADR and hedge fund list you requested.”

“These are all related to the German market, right?”

“Yes. I selected only the most aggressive bear funds.”

Bear funds.

Meaning funds specializing in shorts.

When the overall market is bearish, money flocks to bear funds, and among them are bear funds with aggressive tendencies.

Staff extracted that list and brought it to me.

“..”

I carefully examined the list.

How each fund makes aggressive investments.

How much capital they operate.

Also which sectors they put the most funds into, etc.

I need to input the data into my head first.

As I stuff in information like that,

“!”

There are things that give me a feeling.

I checked the relevant items then decided amounts.

Deciding amounts was always the same.

First roughly writing any amount, then doing up and down to find the appropriate sum. When that work ends, I return the materials to the employee who brought them.

“Please invest in the places I checked, and use the amounts circled next to them.”

“Yes!”

When one person leaves, the next person immediately enters.

“Department Head. I brought the American list you instructed last time. We can divide capital by linking with prime brokers, and if we match appropriate amounts, leverage up to 2x is possible.”

“Just a moment.”

Currently, the places where we’re splitting and spreading investment funds weren’t only prime brokers.

Our country’s domestic market was also included.

“KS Asset Management currently has funds pursuing high risk, high return, so I included those products too.”

“This is more aggressive than expected?”

“Yes. They happen to handle European markets, and Stumbagen that we want to buy is also included.”

Gwangwoon Securities is a company I really like.

Naturally since it’s my workplace.

So I’m not envious of other financial companies, but there’s exactly one thing I envy.

That they have asset management companies.

Asset management companies that become the core of financial groups.

So-called fund companies.

Securities firms handle at most 10-20 trillion level, but when moving to funds, that scale increases to hundreds of trillions.

“Among funds KS handles, there are surprisingly quite aggressive ones. Of course, they have too strong aggressive tendencies so investment money flocked briefly only initially, now it’s wilting.”

“If we put money in, they might move more actively?”

“Yes. As stated here, they’re places pursuing high risk high return. They’ll likely invest aggressively.”

That’s right.

Shall we receive some help from our country’s number 1 financial group?

“Then please put in money according to the amounts I checked here.”

“Yes. Understood.”

Like that, I was dividing and spreading 700 billion into dozens of pieces.

Actually, without complicating things, directly entering Frankfurt Stock Exchange to invest would be best.

The problem is no matter how much Stumbagen has market cap exceeding 100 billion euros, you can’t immediately short 700 billion at once.

First there’s the liquidity problem, and if you suddenly try to short with high amounts, BaFin could stop trading due to market disruption.

And most importantly, my intuition.

Direct investment through Frankfurt Stock Exchange didn’t feel right.

Instead, feedback kept steadily coming every time I divided amounts and examined various fund lists like this.

That’s why I instructed employees to continuously bring related items.

‘But no matter how I look, Stumbagen only has favorable conditions.’

What exactly is trying to burst?

Leverage.

Really a good system.

Being able to make big transactions with small amounts!

But there’s something to remember.

Doing leverage means borrowing money from someone.

Since it’s taking debt, it’d be nice to see profits, but if you see losses, the damage amount becomes double.

That’s why the government designated leverage for ordinary people at maximum 2x only.

Until the past subprime mortgage crisis burst, leverage restrictions weren’t very strong.

But after the financial nuclear bomb burst once, leverage regulations also strengthened, and leverage limits were placed not only on ordinary people but also securities firms.

It was to minimize damage as much as possible if a major financial crisis situation like subprime bursts again.

Of course, at exchanges like futures or FX, leverage up to 100x is possible.

“But even that leverage essentially becomes nonexistent level once capital exceeds hundreds of billions, right?”

If someone doesn’t lend, leverage can’t happen.

In other words, you need to guarantee to establish leverage.

That’s why you need margin.

But from when capital exceeds hundreds or thousands of billions, the story changes.

A few billion to tens of billions can pull leverage to some degree, but when exceeding amounts over risk limits, even banks can’t readily accept.

From then, what’s needed is exactly prime brokers.

“Actually, just having prime brokers, who would do hundreds of billions leverage? Unless credit rating is tremendously good.”

If someone came with hundreds of billions trying to pull 10x leverage, no securities firm or bank would accept.

No. Even doing just 2x requires tremendous credit evaluation.

If contrary to the opponent’s expectations, stock prices drop or rise causing margin calls and they declare bankruptcy, that damage entirely falls on the side that provided leverage.

There are exceptional cases.

If the opponent is truly a famous magnate, or if they have solid capital that can minimize damage, securities firms or banks might consider.

However, 99% refuse.

Because risk management is more important to them than life.

Didn’t they already learn that danger sufficiently from 9/11 and subprime?

“But. Why exactly is Jin-ho trying to contact prime brokers?”

Prime brokers mean major securities firms and major banks.

Goldman Regan, JP Mason, etc., that we commonly know.

They play roles linking investment when trying to invest overseas with large amounts, or through types like hedge funds.

If leverage is needed there, they also provide loans through internal credit evaluation.

“He’s linking with hedge funds through prime brokers, and also using stock lending services.”

“What. Even stock lending services?”

One of prime brokers’ most core roles.

That’s exactly stock lending services.

Bringing shares of specific companies held by institutions or pension funds holding large quantities of stocks, and shorting with those.

Hedge funds frequently use such lending services.

“So Jin-ho is frantically splitting funds now?”

“Yes. Unlike Department Head Jeong.”

Jeong Jin-ho was currently splitting and splitting the money called 700 billion, stuffing it into various products here and there.

“Finally doing split investment?”

From a general perspective, it would look like Jeong Jin-ho is diligently dividing money doing split investment.

“Rather the opposite.”

But as always, Jeong Jin-ho wasn’t someone who does orthodox investment.

“He’s splitting and dividing money, right?”

“Yes. But ultimately where the money heads is all the same. Exactly to Stumbagen.”

What does this mean?

Painstakingly split funds, but ultimately the target is only Stumbagen, one?

President Hwang’s mind turned quickly.

“Right. If he suddenly stuffs in 700 billion, German financial supervision would impose sanctions. Stumbagen stock prices just refreshed all-time highs. Is he trying to ride that? By mixing water here and there?”

“No.”

“No? Wait. Then all this is shorts?”

“Yes. As President said, mixing name tags here and there, putting all money into shorts.”

President Hwang tilted his head.

Why would he suddenly short that thriving Stumbagen?

“Is there some issue with Stumbagen?”

“Nothing immediately out. Rather only favorable conditions are piled up, so the current 250 euro stock price is expected to go to 300 euros next week. No. Analysts are confident it’ll definitely rise.”

But Jeong Jin-ho bet on shorts, not longs.

“That too with Gwangwoon Securities name completely erased.”

“Yes. If Department Head Jeong’s investment really succeeds, the opponent won’t even know who stripped their money. Because it’s all dispersed.”

Conversely if it fails.

Just thinking makes me dizzy.

“Shorting this aggressively on the currently most thriving automobile stock.”

“That too so Gwangwoon Securities’ name won’t pop out even if problems arise later.”

If someone said they’re pouring shorts with 700 billion into the currently most thriving stock in the automobile sector, I would’ve immediately called them to the president’s office and made them strip first.

But that someone is Jeong Jin-ho.

He bet money on francs, the world’s greatest safe asset, at timing nobody expected, predicting Swiss upper limit abolishment, and also made huge money in China shock and Greece default situations.

He always has the ability to amazingly smell money in crises.

“President. I’m honestly saying. Now every time Department Head Jeong invests, I’m a bit scared. Wondering what incident is trying to burst this time to make him act like that.”

“Hehe. Our Jin-ho does have frightening insight. Though I don’t know what basis he makes such decisions on.”

If judging only by data and figures, Stumbagen would rise if rising, absolutely not a company to fall.

“But if Jin-ho made such judgment.”

Deep silence flowed between President Hwang and Executive Director Tak.

Logically, Jeong Jin-ho’s judgment seems somehow wrong, but strangely the heart had faith.

That’s probably because of experiences until now.

“Ah. Executive Director Tak. Your car is Stumbagen’s, isn’t it?”

“Yes.”

“Don’t know what incident will happen, but sell that quickly before it becomes cheap.”

“I just got it not long ago.”

“Then just hold it and go.”

“Ugh.”

Looks like I’ll be looking for a new car right away tomorrow.

Like other fields, but especially the automobile market has fierce competition.

Toyota is solidly maintaining first place with overwhelming sales volume, but they were concerned about Stumbagen gradually rising up.

Where does technological development start?

That’s exactly in reverse engineering.

Disassembling competing vehicles, seeing what technologies they used.

Also in what aspects they’re better than Toyota’s models.

They try to examine precisely and understand those technologies.

“But no matter how I look, the emissions technology side seems we’re far better?”

One reason Stumbagen vehicles are currently receiving praise was exactly significantly lowering emissions output.

This was a bit strange.

Because we know Stumbagen hardly developed eco-friendly technology.

Didn’t they just frantically produce luxury brands only rushing to raise sales volume with aggressive marketing?

“But didn’t they pass all tests?”

“They did. But emissions during actual driving seem different.”

As a result of tenaciously researching the vehicles.

Engineers could discover the difference.

“It’s different. Emissions are definitely different between test environment and actual driving.”

No matter how many times they tested, results during actual driving came out differently.

What this points to was one thing.

“Don’t tell me Stumbagen bastards manipulated the software.”

They manipulated software so it would differ between test mode and actual driving.

“These bastards?”

“Somehow. Can’t adapt.”

Since working under Department Head Jeong Jin-ho, first time seeing money split everywhere like this.

Because his split investment was at most 3-4 level until now.

But now capital called 700 billion is entering dozens of products.

Our department head doing split investment!

“But it’s hard to see as split investment. Ultimately the target is one.”

“That’s true. But the funds Department Head chose are definitely aggressive. These guys also don’t have volume, so they’re already lending and shorting everything.”

“They’re bear funds. He did choose only very ferocious ones.”

Funds have different characteristics each holds.

While there are places just pursuing stable profits, there are ones jumping in with extreme aggression like now.

If done well, jackpot.

If not, bankruptcy.

He put money only in funds with only two results.

Meaning there’s nothing we can directly control here.

“Even shorting like this, the price won’t drop?”

“By now rumors probably spread to German retail investors too. That someone is shorting with mouth open. Prices might be rising from that backlash phenomenon.”

Which institutions shorted which stocks isn’t disclosed.

Because that being disclosed is essentially no different from yelling please kill me.

However, short selling trading volume and proportion can be known.

Though you can’t know who shorted which stocks, you can confirm short selling volume suddenly increased, and can infer which stocks had concentrated short selling by comparing with recent trading volume.

Retail investors aren’t fools either.

That’s why talk probably started slowly circulating in those communities.

That some disgraceful forces dared place short selling on currently sharply rising Stumbagen.

Then backlash psychology arises, causing the situation of purchasing more volume to raise stock prices.

If this gets more serious, all kinds of wolves worldwide gather to pump stock prices, then send those who shorted straight to graves.

Partly because there’s profit for them.

But even when not profitable, there are forces that pull money together because killing short sellers is simply fun.

The stock market is such a place.

Emotions precede reason.

That’s why department employees trembled watching Stumbagen’s price rise day by day with buying volume rising together.

Because 700 billion might really disintegrate like this.

How many days did they spend nervously like that?

“D-did everyone see the news!?”

“Yes. We just saw too.”

Employees who came to work at 6 AM without fail today were all sitting in front of monitors.

Because California just released shocking news.

[Stumbagen manipulated through software so nitrogen oxide emissions came out dozens of times different between test mode and actual driving, which exceeds American environmental standards by 40 times. This clearly breaks the law, and we plan to completely ban Stumbagen vehicle sales for the time being in coordination with the US government.]

They committed acts unbelievable for Germany’s number 1 automobile company.

They manipulated software to deceive emissions output.

And by a whopping 40 times!

“What. Did they think they wouldn’t get caught?”

“Looking at the announcement content, they deceived for quite a long time.”

“The one who deceived is amazing, and countries fooled are amazing.”

“They probably never imagined Stumbagen would manipulate.”

Wait.

This isn’t the time for this.

With such shocking announcements bursting out, Stumbagen stock prices couldn’t be fine.

“Is the German market open now? What about the things we put money here and there? We need to quickly confirm now and move money.”

Section Chief Seo who moved urgently had his eyes meet exactly with Department Head Jeong Jin-ho who just arrived at work.

“Oh. Department Head.”

“Calm down, Section Chief. There’s nothing we need to do now, right?”

“What?”

There’s nothing we need to do?

What does that mean?

Section Chief Seo chewed over Department Head Jeong Jin-ho’s words who entered smiling, then clapped his hands.

“Ah. Right.”

We’re currently auto-hunting, aren’t we?