Chapter 89

Translation: Godtl

"Chairman. It seems Japan has finally drawn its sword."

What everyone had feared had become reality.

Japan announced export restrictions on three key semiconductor items crucial to our country and even removed South Korea from its whitelist, which had been maintained until now.

This marked the beginning of a full-scale diplomatic war between Korea and Japan.

"What's our government's response?"

"Our government did remove Japan from our whitelist as well, but beyond that, there's nothing significant. Frankly, we don't have any strong leverage to pressure Japan."

This was an expected turn of events.

Japan could attack us with semiconductors, but we didn't have any regulatory measures powerful enough to retaliate.

"What about Kangsung and NK?"

"I heard they've been in contact with Gwangun Shipping since before the crisis hit, setting up an emergency supply network. The problem is, Japan has a dominant global market share in those items, so we're scrambling to source them from multiple places."

At the very least, it was fortunate that they had quickly partnered with Gwangun Shipping to secure supplies from alternative sources for now.

"Additionally, they've been researching domestic production of those items while establishing new AMC and semiconductor factories in Hwaseong and Giheung. If things go well, that might play a big role in this situation."

They were managing to respond somehow, but...

Bleeding was inevitable.

If Japan cut off supplies, it would disrupt semiconductor production in our country.

"Here's the ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠current stock market situation. Due to the semiconductor issue, the domestic market has taken a hit overall. Semiconductor-related stocks have all suffered losses. Most importantly, foreign investors are reacting very sensitively to the Korea-Japan diplomatic conflict."

"So they're assuming Japan will inevitably win in the long run?"

"Yes. That's true both in the short and long term. If Japan keeps pressuring us with semiconductors, it's Korea that will suffer the damage."

In contrast, Japan's stock market had risen slightly.

It definitely didn't feel good.

"And here's the list of Japanese companies you requested earlier. The research team compiled a report on which ones would be good investment targets."

Right now, Japan was a place where you could expect slight gains no matter where you put your money.

But that was about it.

You couldn't expect major volatility here.

"Because of the YCC policy, they're forcibly suppressing interest rate hikes. That's why the market has almost no volatility."

Japan was a country practicing zero interest rates.

The U.S. once followed that system too but is now aggressively raising rates.

But Japan's situation was different from America's.

If Japan raised interest rates now, the entire system they've built up could collapse at once.

That's why the YCC policy forcibly ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠suppressed interest rates while also maintaining the yen's value.

It wouldn't be an exaggeration to say that the core of what people call "Abenomics" hinges on this YCC policy.

"The general consensus is that there's almost no chance of the YCC collapsing, so expecting volatility in the near term is difficult."

In other words, if you're investing in Japan, don't expect high returns.

That's why the yen carry trade exists.

Since you can't make money in Japan's stock market, everyone takes out loans at zero interest rates and invests abroad instead.

"······."

I skimmed through the report the research team had prepared.

Still, no gut feeling came to me.

While the domestic market was in turmoil due to this diplomatic war, Japan remained eerily quiet.

It was as if the market itself had flatlined.

Maybe there really was nothing worthwhile here.

Just as I was ruminating and flipping to the next page—

"······?!"

Someone seemed to have scribbled all over it with a black pencil—the page was so full of noise that I could barely make out which stock was written there.

Stunned by the bizarre sight, I just blankly stared at the paper for a moment.

"Is there a stock you'd like to invest in...?"

After I'd been silent for a while, Manager Seo cautiously spoke up.

That snapped me out of it.

"Just a moment."

I marked only the stocks with the heaviest noise from the list.

Holding a pen over those spots felt like someone was doodling directly onto my cornea.

Now, even my eyes were getting dry and irritated from straining to pick out stocks.

"Here."

I quickly handed the report back to Manager Seo.

I considered checking further, but at this rate, it felt like my corneas would get gouged out and I'd go blind.

"...Should we buy all these stocks?"

If they're accompanied by this level of noise and discomfort, it's not a signal to go long.

My intuition is telling me that.

Something capable of shaking the Japanese market is approaching.

"Please take short positions on all the stocks I've checked. Gather the maximum available limit."

"Huh? Y-you mean short selling?"

Manager Seo's eyes widened in bewilderment.

As mentioned earlier, the Japanese market barely experiences any fluctuations.

And now we're placing massive short positions there?

Even to me, this seemed riskier ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠than going long.

The Japanese stock market was currently experiencing a slight uptick, after all.

"But the CEO must have his reasons. However, the number of stocks you've checked is quite substantial, so it'll likely take some time. We'll need to verify the available quantities too. As for the capital, how much..."

"We have about 6 trillion won in available funds, right?"

"Yes. That's the amount increased after the Tesla incident."

6 trillion won.

It was an enormous sum.

But on a global scale, 6 trillion won wasn't that significant.

There are fund companies handling nearly 1 quintillion won at any given moment, after all.

Yet, if we poured this entire amount into the Japanese market, it would be enough to make an impact. I briefly calculated the investment amount.

We didn't need to think long—the reaction came immediately after deploying the full 6 trillion won.

"Invest everything."

＊＊＊

At globally renowned securities firms like Gold Reagan, positions were strictly tiered based on meritocracy.

Starting as analysts, employees could climb to associate level, which opened the path to vice president.

Here, vice president (VP) differed slightly from the Korean concept—they served as actual middle managers, with multiple VPs existing simultaneously.

And one step beyond VP?

That would be managing director (MD).

Equivalent to an executive director in Korean corporate hierarchy.

Only VPs with outstanding performance could reach this level.

"...Gwangun again?"

"Yes. They're currently investigating large-scale short selling opportunities in Japan."

Bailey, an MD at Gold Reagan, had given all teams one standing order:

Whenever Gwangun showed unusual movements, they must report directly.

What was Gwangun?

In this industry, it was an infamous entity that made tongues wag—both remarkably prominent and deeply mysterious.

Europe, Asia, and America.

No region remained untouched by Gwangun.

And wherever they passed through, it felt like a massive storm had swept through.

Thus, Gwangun had earned many nicknames.

Nightmare. Architect. Chaos. And more.

But Reynolds Bailey had his own name for them:

'Black Swan.'

Unpredictable, yet capable of impact beyond imagination when they appeared.

"But why Japan all of a sudden?"

"Korea and Japan are currently engaged in a diplomatic war."

"What does that have to do with anything? Wasn't it already a lopsided fight? Japan holds overwhelmingly superior positioning."

Yet Gwangun's massive short positions on Japan clearly indicated something brewing.

"Any issues on Japan's side?"

"Nothing significant."

This was strange.

"Absolutely nothing? Otherwise, why would they suddenly initiate large-scale short selling?"

"Perhaps the Korean government has some decisive move prepared?"

"Impossible."

Gold Reagan had already completed its analysis.

Korea lacked any substantial countermeasures against Japan's government.

At best, they could leverage national sentiment to reduce tourist numbers or launch boycotts against Japanese products—but these were feeble compared to targeting core semiconductor industries.

"Yet they're pouring this much money into it..."

"Rumors suggest some entity is taking massive short positions on the yen in the FX market too."

While the entity's identity remained unconfirmed, guessing it was Gwangun wasn't difficult.

Which made it even more puzzling.

Gwangun was an aggressively opportunistic investment firm.

Except during acquisitions, they never invested based on long-term perspectives.

That's why this was so peculiar.

"Is this the list?"

"Yes. These are the lists Gwangun is using to locate short selling positions."

Bale scanned through the list carefully.

"...There's quite a lot related to bank stocks?"

"Yes. Along with major export companies, there are also numerous bank-related stocks included. They're also pouring money into bonds."

"Bonds... wait a minute."

At that moment, Bale felt like he was grasping at a clue.

"If it's 10-year bonds... then it's closely related to YCC?"

YCC.

Japan's policy of maintaining interest rates at 0%.

The core of this policy was precisely Japan's 10-year government bonds.

If selling pressure on 10-year bonds intensified in the market, causing bond prices to fall and interest rates to rise beyond the target range, the Bank of Japan would step in to purchase 10-year bonds on a massive scale.

This bond-buying would increase demand, pushing bond prices back up and consequently lowering interest rates back within the target range—that was how the system worked.

"Gwangun is trying to short bonds, and they're also looking for short positions on bank stocks in the Japanese market..."

As the scattered puzzle pieces began falling into place, the full picture finally became clear to Bale.

"Gwangun is trying to collapse the YCC!"

"But... isn't the YCC too large-scale to collapse? The Bank of Japan has firm control over it."

"Of course it is. But Gwangun doesn't see it that way. They must believe Prime Minister Tobe's 'Tobenomics' has hit rock bottom, and the YCC has reached its breaking point."

Yet, as the employee said, the YCC was indeed too large a system to simply collapse.

The Japanese government wasn't foolish enough to leave the YCC system vulnerable.

In other words, they needed a trigger substantial enough to collapse the YCC system.

"But is there anything like that right now?"

No matter how much Bale racked his brain, he couldn't think of any potential trigger.

"This is a separate matter, but there are funds asking us to notify them if Gwangun is positioning for a major move. What should we do?"

The number of factions following Gwangun's astonishing investment prowess had grown.

To be precise, they were factions following Chairman Jeong Jin-ho, who was orchestrating Gwangun's moves from behind the scenes.

Particularly aggressive bear funds idolized Jeong Jin-ho—and rightfully so, as he was someone who had achieved countless successes through investments they wouldn't have dared to imagine.

Wasn't he the investor who had never suffered a single defeat, only securing victories through the most extreme, aggressive investments they had only fantasized about?

Thus, they were intensely curious about Jeong Jin-ho's next move.

Moreover, positioning at this scale clearly meant Jeong Jin-ho was directing it.

For the factions following him, this would be nothing short of excellent news.

At that moment, a thought suddenly struck him.

Perhaps Jeong Jin-ho had even factored in the movements of the factions following him from the outset.

"Let the rumors circulate for now. And see if we can position similarly to Gwangun."

Risk management being what it was, they probably ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠couldn't invest too heavily.

But the bear funds that caught wind of this were the type to charge ahead without thinking—they'd undoubtedly follow Jeong Jin-ho blindly and make reckless moves.

They could collect fees from that, take a small position, and skim some modest profits. Yet one question still lingered.

"Simply throwing money at this won't be enough, will it?"

To make this work, they needed a trigger.

Some event that could strike a blow to Japanese companies...

"I have no idea."

On his way up the ranks, he'd often been called a born investor.

But facing the real deal, one inevitably realizes the truth.

That in the end, he too was just an ordinary human.

＊＊＊

Every nation has its central bank.

The Bank of Japan is no exception.

Their role was to align with the Japanese government's policies, adjust interest rates, and ensure the economy remained stable.

But the Bank of Japan had little to do.

They had maintained a zero interest rate policy for ages, and thanks to the Yield Curve Control (YCC) policy, all they had to do was mechanically follow procedures.

No new ideas were necessary.

That was just how Japan was.

Maintaining the status quo.

Neither growing nor collapsing.

Stubbornly clinging to that exact position.

That was Japan's culture.

After all, Japan had already tasted the bitter consequences of a bubble collapse once before.

Perhaps that was why.

Bank of Japan Governor Takeyama had grown weary of the monotonous routine repeating day after day.

"W-what in the world is happening? Why are government bonds falling, starting with the yen?"

But as if the heavens had taken pity on his boredom—

Something that should never have happened—no, something that couldn't have happened—had erupted.

"There were already forces positioned for short selling, yes."

"I knew that. But this scale is too massive!"

"It seems the U.S.-China trade war acted as the trigger."

The trade war between America and China.

The two nations had been at each other's throats ever since Trent became president.

And when the full-blown trade war erupted, Japan—which had been sitting quietly—got caught in the crossfire.

"Japan exports a significant number of goods to China. But due to this tariff war, Chinese companies have been hit hard and have completely halted imports."

Chinese companies, unable to supply goods to the U.S. because of the heightened tariffs, could no longer use the raw materials they had been importing from Japan.

"But the biggest issue is logistics. Suddenly, shipping schedules are delayed—goods that should have arrived aren't coming in, and shipments that should have gone out are piling up. The ports are in chaos from the backlog."

To make matters worse, as the logistics crisis unfolded, even unrelated companies began suffering collateral damage. Panic seeped into what had been a quiet market.

"And then the short sellers delivered the finishing blow. Now everyone's panic selling."

"Most critically, too many forces have flooded the market. Bear funds have swarmed in all at once, launching attacks, making price defense impossible."

Objectively speaking, the issue alone shouldn't have shaken the market this badly.

But malicious funds had deliberately coordinated their assault, accelerating the panic.

As a result, even institutions unrelated to the bear funds were swept up in the fear, rushing to liquidate their positions.

"C-can we still defend against this?"

To avoid raising interest rates, they had to stabilize the falling bond prices.

That meant buying up bonds in massive quantities—but the scale was beyond manageable.

And it wasn't just the bonds. They also had to stabilize the yen's value, effectively doubling the financial burden.

"If this continues... we'll have no choice but to raise interest rates. Frankly, the bank has already exceeded its capacity to handle this."

"How much would we need to raise?"

"At least 3-5% to restore stability."

Takeyama squeezed his eyes shut.

Cold sweat trickled down his back.

Government bond yields were the economy's baseline temperature.

If they spiked too sharply, borrowing costs would rise for the government, corporations, and households alike—leading to investment contraction, reduced consumption, asset price declines, and an economic downturn. A chain reaction of devastation.

That was why stable management of bond yields was so crucial.

But if Japan unilaterally raised rates by 3-5%, it would effectively mean abandoning YCC.

And if a country that had maintained zero interest rates suddenly took such a drastic step, corporations and real estate would collapse one after another.

But what if they didn't act out of fear?

Then a catastrophic tsunami would engulf all of Japan.

The past bubble collapse would seem like child's play in comparison.

"..."

Takeyama hesitated briefly.

No—there was no time to hesitate. The situation was dire.

"Prepare a press conference. We have to put out this fire somehow."

The executives scrambled into action.

"..."

Left alone in the meeting room, Takeyama stared blankly out the window.

The fact that so many forces had attacked simultaneously meant someone was pulling the strings behind the scenes.

Who had orchestrated Japan's cornering like this? There was no way to know.

He lacked the capacity to investigate now.

But one thing was certain.

Japan, like cherry blossoms in a storm, was withering fast—deliberately uprooted by someone's hand.