Chapter 107
Chapter 107
Translation: Godtl
South Korea's National Pension Service ranks as the third largest in the world.
In contrast, Singapore's sovereign wealth fund ranks eighth in size.
However, there's a key difference between Singapore's and South Korea's pension funds.
It's all about investment strategy.
While South Korea's National Pension Service focuses on generating returns by investing in the safest possible assets, Singapore's sovereign wealth fund doesn't actively manage its money separately.
Instead, they lend surplus funds from the pension reserve to the government, which then redirects that capital elsewhere.
This forms the two pillars at the heart of Singapore's international financial hub: GIC and Temasek.
"These two entities control more capital than South Korea's National Pension Service, don't they?"
"Yes, slightly more. Combined, these two institutions manage approximately $620 billion."
Singapore's government-owned sovereign wealth fund and its state-run investment company.
The financial firepower these two wield surpasses that of South Korea's National Pension Service.
That's why they're the first line of defense when Singapore faces a national financial crisis.
"With the panic selling continuing, the Singaporean government has halted markets and begun restructuring the holdings managed by GIC and Temasek."
Raynold nodded as he received the report.
"So they're liquidating their overseas holdings?"
"Correct. The problem is both institutions hold substantial stakes in Singaporean domestic companies and real estate. They've already started massive sell-offs in the property sector, which is hammering not just Singapore's stock prices but its real estate market as well."
"Moreover, as these two institutions rush to dump their holdings into the market, it's causing turbulence across global markets right now."
Singapore's sudden financial crisis wasn't just the city-state's problem.
The real issue lay in the capital parked within Singapore.
Singapore stands shoulder-to-shoulder with Hong Kong as Asia's financial hubs.
This meant parking money there was considered relatively safe.
But that trust had now shattered.
The secondary shock came from Singapore's sovereign wealth fund and public investment institutions hastily liquidating assets to raise emergency funds, sending tremors through global markets.
Their desperate asset firesale stemmed from the urgent need to stabilize Singapore's collapsing stock market.
Without emergency capital injections to calm the markets, Singapore risked losing its status as Asia's financial hub.
That would spell disaster for the nation.
"So they're desperately trying to contain the damage now."
"At this rate, stabilization should be achievable, right?"
"Yes. With GIC and Temasek stepping in, market stability should follow soon."
Market stabilization is possible through one method:
Forcibly propping up stock prices by injecting massive capital.
"The real problem is the tremendous blow Singapore has taken from this crisis. The fact that these two institutions had to dump their holdings to raise emergency funds shows just how severe the situation was."
"Moreover, their reputation as Asia's premier financial hub, second only to Hong Kong, has been tarnished. That's what must hurt the Singaporean government the most."
Singapore's international prestige peaked precisely in 2008.
When the subprime mortgage crisis triggered a global financial meltdown, Singapore swiftly deployed its institutions to stabilize markets and establish steady financial flows.
That's when it gained recognition as Asia's representative financial hub.
Yet ironically, its response proved sluggish when the financial crisis erupted from within Singapore this time.
"They probably never saw it coming. Singapore is internationally recognized as Asia's financial hub, after all. Nobody could have imagined some madman would waltz into such a stable, massive market wrapped in explosives."
Countless forces had previously attempted to shake Singapore's markets.
All had left empty-handed.
But this bomb was real.
"Even after this crisis stabilizes, Singapore's government will find it awkward to take action against Gwangun Securities. Because ultimately, the EU and Singaporean government themselves provided the decisive triggers for this financial crisis."
If someone attacks, retaliation is only natural.
An eye for an eye, a tooth for a tooth—isn't that the saying?
But the Singaporean government could do nothing.
Hadn't the EU and several other nations stepped in to forcibly dismantle Gwangun Shipping?
They had already paid the price for that.
"Actually, Singapore wasn't the only one that suffered. The two institutions rushed to liquidate their holdings, which also impacted other overseas markets."
"So, to summarize, Gwangun retaliated? Not just against Singapore, but against multiple global markets?"
"Yes. Since major markets were all hit by this incident, you could say Gwangun properly vented its anger."
Listening to this, I couldn't help but let out a hollow laugh.
Because their company was forcibly dismantled, they retaliated by shaking up the entire global financial market?
"You could say they were extremely meticulous. There was a reason Gwangun didn't resist and simply followed the EU's orders to quickly break up the company. It was a fight they couldn't win anyway, so they aimed to maximize their gains."
"From start to finish, that's so Gwangun."
"Yes. Singapore, which was just assisting from the sidelines, ended up taking the brunt of it. And thanks to the cooperation of the Korean government, a significant amount of funds originally flowing into Hong Kong have been redirected to Korea. In the end, Korea also bet on Gwangun and reaped massive profits."
Before the Singapore crisis, the Korean government swiftly implemented financial easing policies to attract foreign capital, doing everything it could.
"But can the government really coordinate that well with corporations?"
"Korea is famously efficient in administrative matters, isn't it? On top of that, the ruling party holds an unprecedented majority of seats, and knowing that failing to curb the skyrocketing real estate market would severely shake public sentiment, they seem to have gone all out to help this time."
In the end, the Korean government also gave its full support because it stood to gain significantly.
Their gamble seemed to have paid off spectacularly.
"However, not all the capital flowing out of Hong Kong went to Korea."
"But they still took more than half, didn't they?"
"Yes. Even that much can be considered a major success."
By turning the damage from the forced dismantling of their shipping business into an opportunity to collapse the Singaporean market, they secured enormous profits.
At the same time, they successfully destabilized the markets of the very nations that had helped dismantle their company.
Venting their anger and making money.
No matter how many times I thought about it, Gwangun was a mad company.
But strangely, something still felt off.
"Do you really think Gwangun would settle for just half?"
"They must have made an enormous profit from this short selling, no? They're already unwinding their positions."
"Yeah. But they didn't completely destroy them. Something about backing off now feels... off."
"Are you suggesting Gwangun has another move prepared?"
But no matter how much Reynolds racked his brain, he couldn't fathom what additional strike Gwangun might be planning.
"No matter how insane Gwangun is, there's no way they can do anything more at this point."
Right. That must be it.
Still, he couldn't shake this strange unease.
"Any other agenda items?"
"Due to the ongoing U.S.-China trade war, the BDI index is currently..."
As he listened to the reports, an unusual one came in.
"What? Where?"
"There's been an increase in cases of unexplained pneumonia in Wuhan, China. It's been formally reported to the WHO."
Reynolds immediately furrowed his brow.
"But why report that?"
"Well, you instructed us to report any virus-related incidents..."
He had given that order back when Gwangun was acquiring pharmaceutical companies left and right in the UK.
"Pneumonia?"
While pneumonia can indeed be caused by viral infections, couldn't it have other causes too?
"That's not the kind of pneumonia I meant. I'm talking about a truly serious virus. There's no need to report something this trivial."
"Ah, understood. My apologies."
Besides, Wuhan?
He didn't even know where that was.
Reynolds had already forgotten the name of the place as he moved on to other reports.
＊＊＊
True to its reputation as the financial powerhouse of Asia, Singapore successfully managed to stabilize the plummeting markets by leveraging the institutions under its control.
"On the surface, things may appear stabilized, but Singapore suffered a massive blow. Honestly, I was shocked. I never imagined there could be a way to inflict that level of damage on Singapore. Haha."
"Yes. Thanks to that, a significant amount of foreign capital has flowed into our country. When global markets were shaken by Singapore's turmoil, our KOSPI was the only one that skyrocketed like crazy."
Seeing Singapore falter, the capital fleeing Hong Kong found its way into Korea.
Our government's swift action to implement easing measures and open up the market played a huge role, and our KOSPI reaped massive benefits as the index surged from that influx of capital.
"Given that we've achieved this level of success with the first round of easing, the government plans to proceed with additional deregulation. For instance, raising the stock price limit—which increased to 40% in the first easing phase—to 50%."
As if to prove the sincerity of this market opening, the government raised the stock price limit from its fixed 30% to 40%. And now they intend to push it even further to 50%.
But this was a double-edged sword.
There was a reason our domestic market had been capped at 30%, wasn't there?
It was to suppress the flood of speculative forces.
If they raise it to 50%, those forces will only grow more rampant.
Yet the reason they're proceeding with this deregulation is that foreign capital—enough to counter those speculative forces—is now pouring in.
Those funds that exclusively hunt short-sellers.
So-called activist funds.
If such capital floods in, short-selling forces will naturally dwindle, and companies can grow through these funds.
Because, ultimately, those funds are also here with the intention of growing companies before selling them off.
"So even within the government, this achievement is being highly praised. The financial sector is calling it nothing short of a miracle. Frankly, no one dared imagine we could pressure Singapore's market so effectively by leveraging the dissolution of the shipping business."
I offered only a faint smile.
Even these compliments felt burdensome, and simply sitting here was uncomfortable enough.
"You flatter me. Besides, I never intended to deliberately collapse Singapore's market."
"Ah. I... I see?"
"Yes. More importantly... What brings you all the way here today?"
The head of the National Pension Service is its Chairman.
Chairman Choi Hyun-tae and Director Jo Sang-sik, who serves as his direct subordinate, had come all the way to our company.
"Actually, we came to discuss something important with you, President."
"If it's regarding the group, wouldn't it be more appropriate to speak with the Chairman...?"
"Initially, we did intend to meet with the Chairman, but we were told financial matters would move much faster if we spoke with you instead. And we have ears too. We know very well who the real power behind Gwangun Group is."
Still, I hadn't expected the National Pension Service—let alone its Chairman—to come looking for me personally.
"By any chance, have you seen the recent announcement from our pension service?"
"Ah, yes. It's causing quite a stir, isn't it?"
There had been a recent statistical release from the National Pension Service.
A shocking report stating that the pension fund was on the verge of depletion.
"Yes. It must have been quite a shock to the public. If we don't reform the National Pension Service as it is now, the fund will be completely depleted by around 2057."
The National Pension, set to run dry by 2057.
Unfortunately, this was reality.
In truth, the pension's yield isn't bad at all.
It's no coincidence that securities firms say only monsters work at the National Pension Service.
Yet despite that, the National Pension is doomed to depletion.
"And that projection was made under the assumption of a 4.5% annual return. Meaning, if the yield drops further, the pension will dry up even sooner."
It's an institution handling over 700 trillion won in funds.
The third largest of its kind in the world.
Yet even that can't prevent its depletion.
"We believe now is the last golden opportunity."
"Are you saying reforms must be implemented now?"
"Yes. But realistically, what administration would dare attempt such reforms? Reform means everyone would have to pay double the current pension contributions. Politicians who are hypersensitive to votes would never allow that."
This was precisely the National Pension Service's dilemma.
Everyone knows reforms are necessary.
Yet no government will implement them.
Because everyone knows doing so would cause votes to come crashing down.
How would hardworking citizens react if told their pension contributions would double starting today?
"The irony of democracy. Even the most crucial national matters can't be advanced because of votes."
The topic carried immense gravity.
"We've prepared several contingency plans. One of them is the ISA. Since the state can't fully guarantee retirement security, we're creating accounts for individuals to prepare their own retirement. With tax benefits included."
ISA.
Officially called the Individual Savings Account.
Though the government denies it, the ISA system was created precisely because national pension depletion became inevitable—to encourage citizens to prepare for retirement themselves.
"But this is still just passing the buck. Without solving the fundamental issue, future generations will bear an unbearable burden, and the resulting social chaos would be beyond description."
The fertility rate played a major role in the pension system's decline.
Meaning, a much smaller future workforce combined with an aging population would lead to catastrophe.
"Here's our internal report. A quick glance will show you our current predicament."
I opened the report handed by the director.
Suddenly, as if waiting for this moment, intense visions came cascading before my eyes.
"!?"
Intergenerational conflict.
Political turmoil.
Economic system paralysis.
Riots erupting across cities.
The once vibrant and beautiful Korea was burning to ashes.
The terrifying part was how imminent this future was.
"While discussing this issue, a thought occurred to me. Gwangun is making achievements that will go down in financial history. If we could learn from Gwangun Securities' data and investment methods, might we solve this fundamental problem—that's what I thought."
"Our target return is 5% annually. But with Gwangun's help, even raising it to 8% could significantly delay the depletion point. Without increasing public burden."
5-8% annual returns.
To investors, these seem like meager yields.
But we must remember—they're managing 700 trillion won.
Meaning, maintaining even 5% annually would border on miraculous.
And the problem is that even such miracles wouldn't prevent depletion.
"What we want to learn is Gwangun Securities' investment system. How you analyze markets, what algorithms extract data, how investment decisions are made—everything. We'd be deeply grateful if you shared these methods."
But what if we could push beyond 5%?
Not 5%, but 10% maximum.
No—what if we could achieve 20% annual returns?
"..."
I placed my hand on their report again.
"...!?"
This time, completely opposite images flashed before me.
A Korea shining far more brilliantly than before.
"Even simple advice would help. We've come with sincere hearts—please don't turn us away."
Unfortunately, I have no special techniques to share.
Our firm doesn't analyze data using complex algorithms like other companies.
We use something far simpler yet more certain for investment decisions.
My intuition.
Any advice I could give would be based solely on that.
"By any chance..."
As I finally opened my tightly shut mouth, both men leaned forward.
"Do you short?"
"...Excuse me?"
Soon, their faces colored with bewilderment.