KNC International (5)
Park Geon-hwi let out a triumphant laugh.
Of course! Blue-chip investing is the answer after all. I told you, you should never even look at junk like that.
He walked over to Kang Seon-woo, who was eating lunch with Cha Soo-yeon in the company cafeteria, and offered what was clearly meant to be comforting advice.
"KNC International is looking like it’s about to crash. You should probably sell now, while you still can."
"I asked a friend, and he said there’s nothing to worry about for the moment."
At that, some of the other employees listening in chimed in.
"Isn't ten thousand won a bit too expensive?"
"It's gone up about sevenfold compared to last month."
Kang Seon-woo replied without missing a beat.
"He said this is just a correction, so it’s a buy-the-dip opportunity."
Park Geon-hwi laughed loudly on purpose, as if the whole thing were absurd.
"What are you talking about? I even asked my cousin at Mirae Investment Securities, and he said it was a false disclosure. There's no proof any of it’s real. Stocks that rise on rumors always collapse fast."
"I don't really know, but that's what he said."
"If you invest based on talk like that, you're asking for trouble. Small-cap stocks with thin trading can become impossible to unload when something goes wrong. And if it turns out to be a false disclosure, this won't end with a price drop. It'll be delisted. You might not like hearing that the stock you own could get kicked off the exchange, but I'm only saying this for your own good, Seon-woo, so take it seriously."
"Yeah. Thanks for worrying about me."
Kang Seon-woo didn’t bother arguing with him.
The substance of what he said wasn’t wrong.
Judging by this, he must not have gotten his MBA for show.
As Park Geon-hwi spoke with confidence, the employees who had been listening began nodding along.
"Well, I guess it is a little risky."
"No wonder Geon-hwi knows so much since he works at Mirae Investment Securities."
"You're right. It’s probably better to put your money in blue chips."
Kang Seon-woo acted like he didn’t care at all. He probably had no intention of selling anyway.
Park Geon-hwi snickered to himself.
Good. Once it all blows up, he’ll be pounding the ground and regretting that he didn’t listen to me.
The previous day, KNC International had dropped 9 percent. The next day, it fell another 20 percent, slipping below ten thousand won.
The employees told Park Geon-hwi,
"Good thing we didn’t buy after listening to you."
"You really can tell the experts apart."
"If we’d bought, we’d have been in serious trouble."
The thought of Kang Seon-woo looking miserable with a sour face made Park Geon-hwi feel oddly better.
With that thought in mind, he headed toward Development Team 3—only to find Kang Seon-woo grinning from ear to ear.
Even after the crash, is he still in the green?
Park Geon-hwi approached him with a show of concern.
"That drop today looked bad. You sure you're okay?"
Kang Seon-woo looked at him, completely lost.
"A crash?"
"It dropped 20 percent today alone."
"That was three minutes ago. It just hit the upper limit."
"What?"
"Didn't you see the article?"
"The article?"
Kang Seon-woo showed him the piece.
The Ministry of Foreign Affairs had simply relayed KNC International’s cobalt mine report as an official disclosure.
And not just any office—the Ministry of Foreign Affairs.
A government agency would never announce false information.
Which meant the cobalt reserves had to be real.
The stock, which had fallen to 8,000 won, shot straight to the upper limit the instant the ministry’s disclosure came out, and the discussion board for the stock erupted.
I was reading through the article and the comments when Seon-woo came rushing into the house and asked,
"Hey! If the Ministry of Foreign Affairs disclosed it, doesn't that mean it's actually real?"
I was dumbfounded.
"You believe that nonsense too? What would the Ministry of Foreign Affairs even know about it to make that kind of disclosure?"
"Maybe they sent employees out to dig it up themselves."
"Are you kidding me?"
"They've probably got an embassy in Congo, right? Maybe the staff there went to check it out."
"Do you even know how big Congo is?"
The Congo's landmass is monstrous, big enough to rank among the top three in Africa.
This wasn't some mine in the middle of a major city. It was probably tucked away in a remote place with roads barely built at all.
There was no way some employee had gone all the way out there.
"Now that you put it that way, yeah. But why is everyone believing it without thinking?"
"Words carry different weight depending on who's saying them."
People who normally wouldn’t pay attention to a stock recommended by a rookie securities analyst would rush out and buy it if Aaron Baker said to do it.
Since the Ministry of Foreign Affairs had stepped in and confirmed that the report was accurate, everyone had no choice but to believe it.
In fact, after the ministry’s disclosure, KNC International hit the upper limit day after day and surged violently. Analysts kept raising their target prices as if they were bidding in an auction.
The market was swept up in an untimely frenzy for theme stocks, lithium and battery-related names rose one after another, and then electric vehicle stocks followed.
Then stocks tied to charging stations climbed on the idea that more electric cars meant more charging infrastructure, and wire and cable stocks rose because more electricity transmission would be needed.
"By that logic, you can make anything a theme stock."
This wasn't something that happened once or twice.
The history of the stock market was, in a very real sense, the history of theme stocks.
Every time a presidential or general election came around, the whole market would shake with election-themed names. A company’s stock would soar simply because the CEO had taken a photo with a likely candidate, or because a relative was registered as a board director.
In the early 2000s, one construction company even filed an application with the authorities and went around promoting itself by claiming it would haul up a treasure ship sleeping beneath the East Sea.
The company had been on the verge of collapse right up until then, but after announcing the salvage plan, it soared for seventeen straight limit-up days before being delisted.
At the end of the 1980s, a rumor swept through the securities market that the Chinese government would install windbreaks along the Great Wall and hand the project to Korean companies.
The Great Wall is a staggering 6,350 kilometers long.
If you landed that project, you’d be securing a decade's worth of work all at once.
Construction stocks rumored to take the job, and steel stocks rumored to manufacture the windbreaks, both exploded upward.
That much, at least, made some kind of sense.
But then bakery-related stocks surged because, if the workers on the project each ate just one loaf of bread, think of the revenue; dairy stocks rose because they’d need something to drink with the bread; and pharmaceutical stocks jumped because, if people ate too much bread and got indigestion, they’d need medicine.
Looking back now, it sounded like absolute madness. But investors at the time believed it in all seriousness. And that hasn’t changed even now.
History always repeats itself.
Seon-woo asked in confusion,
"But what’s the connection between that KNC Security and KNC International? It went up 17 percent today too."
"There isn't one."
"Then why is it going up?"
"Who knows."
Because the names sounded similar?
I’d bet even if you brought in an economist who’d won the Nobel Prize, they still wouldn’t be able to explain it.
The truth was, when you spent enough time in the stock market, you saw bizarre things like this all the time. Watching it happen, you started to feel like stocks rise and fall for no real reason at all.
Just last month, the price had been 1,500 won. Now it had climbed past 30,000. The money we’d put in had ballooned to 9 billion won.
"This is for real?"
"Don't get too excited. A stock isn't your money until you sell it."
The truth was, making money from a rigged stock was very easy.
All you had to do was ride the wave of a stock already going vertical. The odds of a stock that had been soaring suddenly dropping the instant I bought it were extremely low.
But the people who actually said they’d made money off rigged stocks were few and far between. The ones who got burned were everywhere. The reason was simple: they couldn’t find the right time to get out.
"How long is this thing going to keep rising? I heard people saying it could break 100,000 won."
I snorted.
"Does that even make sense?"
When a stock is climbing, it always feels as though it might rise forever. But no asset can keep going up indefinitely.
Especially not if earnings don't support it and the price is being pushed up purely by supply and demand.
After all, the higher the price goes, the more money it takes to keep the scheme going.
A 10,000-won stock needs 10,000 won to double, but a 100,000-won stock needs 100,000 won to do the same.
"Yeah. It's about time this thing started winding down."
No matter how much fun a party is, it has to end eventually.
Every rigged stock ends the same way.
With a crash.
If a stock that has exploded upward just stays at that price, then it isn’t a rigged stock in the first place. That’s why you have to sell and get out before the collapse.
If you miss the sell window, you may not even be able to unload it at all.
You might think that if the price falls, you can just sell it lower and cut your losses, but in Korea the upper and lower limit rules prevent trading more than 30 percent above or below the previous day’s closing price.
So in the worst-case scenario, you can’t sell at all and all you can do is watch your assets vanish by 30 percent every single day.
As I recalled it, the stock had once shot up to just under 40,000 won before plummeting straight down.
When a whale enters a small pond, the water level rises. But when that whale tries to leave, the water level drops again.
So when can the whale get out of the pond?
When a downpour comes.
A heavy rain temporarily lifts the water level, letting the whale escape safely.
Here, the rainstorm represents the buying pressure from retail investors.
In other words, the big players dump the stock onto individual investors, take their money, and leave. Naturally, the late-arriving retail buyers are left holding the losses.
"By now, everyone who designed the scheme is probably just waiting for the right time to cash out."
And the Ministry of Foreign Affairs staff who got on board, of course, too.
Once everything was exposed as a lie.
The prosecutors, together with the Financial Supervisory Service, would launch an investigation.
What happened in the end?
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