Chapter 12

CHAPTER 12

Literally, the world turned upside down. Reciprocal tariffs. It was a card no one expected.

"Isn't he really senile?"

Gwang-ho also agreed with Kim Seong-won's words.

"I knew he was reckless originally, but didn't know he would do crazy things to this extent."

"Exactly fitting expression. Crazy thing. Among financiers worldwide, most stories are that they didn't know Goldwin would go this far."

"Truly an all-time president appeared."

Reciprocal tariff was literally a notification. A notification saying don't think about trading with the US if you don't follow this. Evaluation continued that the US, which was the world police, turned into a world bully.

"How long will this go?"

"Well. If announced ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠globally like this, wouldn't it go long like the US-China trade war in the past?"

During Harvey Goldwin's first term, he declared a trade war with China. As he drastically raised tariffs on China, China also proceeded with retaliatory tariff increases on the US. Naturally, the market was shocked and indices plunged at the tariff war of the two countries controlling world hegemony. Gwang-ho, who was at the scene at the time, had the fear of that time engraved in his bones.

"Stock markets will drop a lot with this tariff increase."

"It might go like during the 1st trade war. So the market is showing movement ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠to take shorts."

The market was already moving. As the Asian market opened, KOSPI, Japan's Nikkei Index, China's Shanghai Composite Index, and Hang Seng Index fell in unison. Plus, as the dollar rose rapidly, rapid changes occurred on the foreign currency side as well.

"Shouldn't we also take a position quickly?"

It was as Kim Seong-won said. When such a big event broke out, investment companies put aside what they were doing and stepped out to take insurance. Although places taking aggressive shorts were extremely few, they purchased put options and took long positions on VIX. There was one reason for not taking aggressive shorts.

"Others are urgent because there are many kids who already bought spot and took longs, but we are fine since most is cash portion. If we go out aggressively unreasonably here and Goldwin says strange sounds again, we'll get hit immediately."

It was exactly because of policy volatility. This decline happened because of Goldwin's announcement. However, during the 1st term, Goldwin frequently did deformed things changing policies he put out overnight. So they couldn't easily utilize leverage or take shorts. Because if they took a position and Goldwin changed words overnight, it was immediate liquidation.

"But chain bad news won't pour like Corona after the US-China trade war, right?"

"Chain bad news?"

"Yes. Like connecting with the AI bubble the CEO instructed in the morning..."

The US-China trade war gave a big shock to the stock market, but recovery was also achieved quickly. Plus, reconciliation gestures came out in the middle, making the market shock less. That is the reason expectations poured that the market would recover quickly after the 2-year trade war ended. However, 2 months later, as the epidemic generated in Wuhan spread rapidly worldwide, the market received a 2nd shock. At the time, Nasdaq fell 30 percent, Dow Jones 37 percent, etc., the market was submerged in fear in just one month.

"If such a thing happens this time too, the market will literally be scorched earth."

AI bubble was the core sector leading the current market. Whether there is a real bubble or not, if such bad news bursts one after another, the market cannot endure. A shock bigger than the Corona situation of 2020 could come.

"If the CEO told to write a report seeing up to here, it's truly great foresight."

While agreeing with Kim Seong-won's words, on one hand, he had doubts.

AI bubble is something everyone is thinking about, but it's not something to instruct as the start of the first work. What on earth is the guy thinking?

He couldn't read the thoughts of his closest friend. It was then.

The door of the CEO office opened and Gang-hyeon came out. Naturally, when everyone's gaze focused on him, Gang-hyeon spoke.

"Department Head Im, you reached the JP Morgan side?"

"Ah, yes. We decided to make an account on the JP Morgan Singapore side, and they said they would reply with the due diligence schedule within tomorrow."

"Contact again and ask for a reply within today. And convey to ask for due diligence within this week."

"Within this week?"

"Yes. If they say it's difficult, convey that we can raise the initial deposit up to 40 billion."

The deposit currently suggested to JP Morgan was 20 billion. This could also look like a big customer, but from JP Morgan's position, there were many such customers. However, doubling the initial deposit meant having cash ability to inject more operating funds anytime, not just a simple balance increase. From JP Morgan's position too, it was a condition becoming sufficient reason to put this customer on priority and conduct due diligence directly.

"Understood. ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠I will contact immediately."

"And more account opening is needed. Contact Morgan Stanley side too and request."

"Morgan Stanley? Not Goldman Sachs?"

Kim Seong-won asked. Traditionally, if one makes an account at JP Morgan, there were many cases of contacting Goldman Sachs afterward. Because they were places that could be called the two great mountain ranges of the IB industry basically. But passing Goldman Sachs and finding Morgan Stanley first wasn't understood from Kim Seong-won's position. Gang-hyeon explained simply to such Kim Seong-won.

"For the trading to do in the future, Morgan Stanley's response is faster than Goldman Sachs."

"Ah...!"

Both were tycoons of Wall Street, but the texture of the fight they were good at was different. If Goldman Sachs was the side designing the flow of the entire market, Morgan Stanley was closer to the side cutting out actual profit amidst volatility. What Gang-hyeon needed in this board was the latter, not the former.

"Do you view that market volatility will increase in the future, CEO?"

At Gwang-ho's question listening to the story, Gang-hyeon nodded.

"Since Goldwin started moving his mouth. Considerable volatility will come out. Since Mr. Seong-won will be busy, please loosen your hands."

"Yes! Understood!"

At the words that he would be put into full-scale work, Seong-won's heart started beating.

Lee Jong-hyeok of JP Morgan Korea Branch was dissatisfied with the sudden schedule change.

"Busy because volatility increased in the market anyway. Deposit is 30 million from 15 million? Why is Singapore taking care of this class to this extent?"

Singapore contacted directly and talked about schedule change. Meaning the upper line cared about this company quite a bit.

"Not a name heard in Yeouido either."

Before going out for due diligence. He checked KH Capital's personnel. But there was no familiar name. Just in case, he asked acquaintances.

"This person Im Gwang-ho, seems right that he rolled in the derivatives side. But not a level for Singapore to move right? Above all, the representative is too unknown."

Representative Choi Gang-hyeon. There was no one who knew his name among surrounding acquaintances. Words came out asking if they should find out a little deeper, but he shook his head. Because if it's a name not popping up in acquaintances' heads immediately, it wouldn't be that important a name.

"Don't know the reason."

While dissatisfaction accumulated, the car arrived in Seongsu-dong. Lee Jong-hyeok, arriving in front of the building, looked up at the old building and soon went inside. The 5th floor arrived by elevator gave an impression of being neat. Arriving in front of the door, an employee soon opened the locked door.

"How can I help you?"

"I am Manager Lee Jong-hyeok from JP Morgan. I visited for due diligence today."

"Ah! Please come inside."

The interior entered guided by the employee certainly gave a completely different image from the outside as if recently remodeled. But Lee Jong-hyeok examined the internal situation rather than such external things.

Resident personnel are not many. That side is back office, this side is risk management... or could be research.

Like a person in charge of due diligence, his eyes quickly checked the situation of the office. Passing one more door and entering inside, a space doing trading was seen.

"Please wait a moment."

At the words of the employee guiding, he stopped steps and examined the inside.

Two employees doing trading, and is that side the CEO office?

Even for a Family Office of this scale, only two traders was too few. Minimum three, appropriate four. Only then could position operation, hedge, and monitoring run simultaneously. At that time, a tall man approached. It was an impression that an athlete would fit ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠better than a trader.

"I am Department Head Im Gwang-ho of KH Capital."

"Ah, I am Manager Lee Jong-hyeok of JP Morgan."

"Thank you for coming out quickly despite the urgent request."

"No. Is the CEO in the seat perhaps?"

"Yes, he is waiting. Let's go."

Guided by Gwang-ho, Lee Jong-hyeok headed to the CEO office. Opening the door and entering, Gang-hyeon standing up welcomed him.

"I am Choi Gang-hyeon, representative of KH Capital."

"I am Manager Lee Jong-hyeok of JP Morgan. I took charge of this due diligence."

"Documents are all prepared. Please sit and review."

All preparations were already finished. Lee Jong-hyeok, sitting on the sofa guided by Gang-hyeon, checked if there were abnormalities while reading prepared documents.

As per documents sent to our side, it's a company set up with this man Choi Gang-hyeon's capital. Wondered where such funds came from, earned with Bitcoin?

IB evaluates due diligence on the company in detail before accepting as their customer. They have to check where the source of funds they roll is, and also how much cash the company holds. Because only then can they grasp how much payment ability there is when an accident occurs due to products using leverage.

Initial deposit possible up to 40 billion, and corporate account balance is...

The most important thing was how much cash was in the corporate account. Because the authority that can be granted to the corporation is determined according to that cash. Normally, holding cash about 3-4 times the deposit was general. Since the deposit KH Capital initially suggested was 20 billion, he thought there would be about 80 billion level at most in the account. However.

KH Capital held 120 billion cash.

It hasn't been a month since establishing the company. Holding this much cash?

Cash holding amount was surprising, but what was more surprising was the phrase written below.

There was only one case that can be displayed as a related party in a Single Family Office.

120 billion all came from this representative?

Gang-hyeon, having a face looking like a good person, looked different. Afterward, Lee Jong-hyeok, who reviewed all documents, asked Gang-hyeon.

"Document procedures are finished. Before that, I want to ask just one thing."

"Yes, please ask comfortably."

"Perhaps when an unexpected accident bursts, what level is the cash the company can mobilize immediately?"

Conditions could be determined only by judging this part clearly. Gang-hyeon also knew that, so he answered without hesitation.

"There is about 50 billion more cash that can be mobilized right now. Including corporate account balance, 170 billion. Including real estate and other broker accounts, maximum about 200 billion operation is possible."

It was Lee Jong-hyeok realizing the reason Singapore moved.

This isn't Singapore level, but a customer the head office has to manage directly.

It was the moment evaluation on KH Capital changed.

JP Morgan moved quickly.

"Account opened."

Account opened in just one day after due diligence ended. Primary preparation was finished. Now it was time to jump into the market in earnest.

Making an account urgently at JP Morgan like this means intending to enter aggressively right?

Kim Seong-won saw Gang-hyeon moving busily. So he expected that he would participate in the market aggressively. To participate aggressively at the current point, taking a short position was the most aggressive. The moment he was thinking naturally short order would come out.

"Entering long position from now."

Unexpected command came out of Gang-hyeon's mouth.

"Long position? Stock market is still continuing to drop. Isn't it too early for long position to enter?"

Kim Seong-won's words were close to the right argument. But Gang-hyeon didn't shake. To his eyes observing the monitor, it was clearly visible. Stock markets surging with red light.

"Mr. Kim Seong-won, will you ask questions in this way even when the market is open?"

At those words, Seong-won's face stiffened.

"Sorry, will proceed immediately."

The duty he took charge of was operator placing orders, for that role fingers had to move before head.

Watching Kim Seong-won's hands moving quickly, Gang-hyeon moved his gaze to the monitor with a satisfied expression.

Now it starts.

Since he warmed up with cryptocurrency, now it was time to jump into the world stock market in earnest.

(End of Chapter)

— Translated by Prime Works —