GL Entech 10
When GL Entech’s stock went into free fall, the KOSPI index dragged down with it. As the index sank, the KOSPI 200 followed, and program selling flooded the market.
A circuit breaker was triggered in the futures market, and trading in KOSPI 200 futures and options, along with other index-linked derivatives, was halted for five minutes.
The day after GL Entech’s shares had closed at the daily limit down, they fell to the limit down again as soon as the market opened. A stock that had climbed as high as 860,000 won had dropped to 347,000 won in just two days.
It had risen on nothing but demand, so once that demand vanished, a collapse was only natural. Until then, the people who had been desperate to buy were now desperate to sell.
Supply had outstripped demand.
The stock price had only been returning to where it belonged, but the market was full of wails.
Even while GL Entech had soared more than 700 percent, the rest of the market had kept sliding, except for a handful of stocks that had their own favorable news, such as physical split-off cancellation or subsidiary listing reversal.
But once GL Entech itself began to crash, those stocks collapsed right along with it.
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(truncated)
As such, Continue Capital’s profits from its string of successful investments in GL Chemical and GL Entech are expected to exceed at least 2.5 trillion won.
RuneStar, which caused a major uproar over “asset stripping” during the Asian financial crisis, made 400 billion won over seven years. Continue Capital, by contrast, pocketed several times that amount in just two or three months.
(truncated)
This incident was caused by Continue Capital’s aggressive stock accumulation.
But the root cause was GL Group’s own self-serving refusal to share profits with its shareholders.
While small shareholders in GL Chemical and GL Entech suffered enormous losses, GL Group itself took almost no damage.
All Chairman Go Jae-ik had to do was bow his head once.
An economic structure built for conglomerates, and a decision-making process centered on chaebols, had brought about this disaster.
The political world would have to hold corporate executives heavily accountable for what had happened here.
Otherwise, the problem of the Korea Discount would never be solved, and the second and third Continue Capitals might well appear at any time.
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What had happened over the past few months was shocking in more ways than one.
Across the entire history of the Korean stock market, there had never been a case where a single force had so completely seized control of one company’s fate.
And there had never been an example of success on this scale, either.
Continue Capital had invested 960 billion won into buying GL Entech shares.
It spent 800 billion won acquiring the first 40 million shares, then another 160 billion won buying an additional 4 million shares later on.
The average purchase price came to around 220,000 won.
Of that, it had sold 30 million shares at around 800,000 won, which alone amounted to 2.4 trillion won. Even after subtracting the invested capital, that still left more than 1 trillion won in profit.
And it still held 14 million shares.
For Continue Capital to have made that much money while the stock rose and then fell meant that someone else had to have taken the loss.
Institutions that had belatedly rushed into options and spot buying were left holding massive losses.
After Park Hyeon-dong reported the loss figure to him, CEO Jo Gyeong-hwi wore an expression of utter disbelief.
“How much?”
“About 200 billion won. If we factor in the likelihood of further declines, it could widen by another 50 billion.”
“……”
Last year, KD Securities had posted 180 billion won in operating profit.
And now they had lost more than that in an instant.
CEO Jo Gyeong-hwi collapsed in place as if fainting.
“President!”
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Even after the crash, GL Entech held in the 200,000-won range.
Trading remained active at that price. Thanks to that, we were able to sell the remaining 14 million shares without taking a loss.
After financial costs were deducted, the profit came to roughly 1.75 trillion won.
Continue Capital once again made its name known around the world after the Hanjeong Group affair.
I took a call from Heo Min-woong.
“Hey, brother. You really made a killing. After reading the articles, I can’t even find the motivation to work.”
“Since when have you been a hard worker?”
“What’s that supposed to mean? I’ve basically been living at the company lately. I’m doing my best with a sense of mission, you know, to provide for the livelihood of our executives and their families.”
“Then why don’t you feel like working?”
“Do you know how much our group made last year?”
“Around 300 billion won?”
“Right. Every affiliate worked itself to the bone and pulled in 300 billion won. We even popped champagne because it was the first time our operating profit had ever topped 300 billion. But Continue Capital invested in GL Chemical and GL Entech and made how much in just one or two months? How am I supposed to feel motivated after that?”
Hearing it laid out like that, I could feel how enormous the success really was.
Unfortunately, while I was making money, someone else was losing it.
The hedge funds that had shorted the stock couldn’t meet margin calls and went under, and several small brokerage firms that failed to settle their obligations closed their doors.
That was why investing always had to be approached with care.
“You made a ton, so buy me a drink. How about today?”
“Maybe another time.”
“Why? Got plans?”
“Nothing fixed. I just have someone I need to meet.”
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I stepped into a sundae-gukbap restaurant that stayed open twenty-four hours a day.
It was well past midnight, so there were hardly any customers. In a corner seat, a middle-aged man in a suit was drinking soju with his sundae-gukbap.
I plopped down across from him and ordered, “One sundae-gukbap, please.”
The man, who had been looking down, lifted his head and saw me.
For a moment, surprise flickered across his face. Then he said, flatly, “What brings you here? Surely you didn’t come to brag about making money.”
He didn’t seem especially pleased to see me.
Even his tone was a little different from before.
“I was just passing by nearby and got hungry.”
Namgung Seok ignored me and kept drinking his soju alone.
Soon after, the sundae-gukbap arrived. I had ordered it mostly because it felt awkward just sitting there doing nothing, but once I started eating, it went down easily.
Come to think of it, I’d hardly been eating properly lately. I supposed it was because massive investments had a way of draining the blood right out of you.
I couldn’t remember the last time I’d eaten this comfortably.
And it wasn’t just because I was hungry—it really was delicious.
No wonder he kept coming here.
I raised a hand. “Could I get some more kkakdugi, and another bottle of soju?”
I poured the soju and drank.
There was nothing quite like a shot of cold soju with steaming soup as an excuse for side dishes.
You could make hundreds of billions and still never quit a good gukbap.
Namgung Seok looked at me as if I were unbelievable.
“You sure know how to enjoy your food.”
“This place is a gem.”
“Was all of this planned from the beginning?”
“Not exactly. Did you really think I knew it would end up like this?”
This wasn’t something that had happened in the first round.
Even when I had shorted GL Chemical, I hadn’t expected things to go this far. That was why the whole time I invested, it felt like walking a tightrope.
Drinking my soju, I said, “I’m truly glad the regulatory bill you pushed through passed.”
Namgung Seok glared at me.
“That bill should have passed before something like this happened.”
“It passed because something like this happened. Otherwise, do you think a bill restricting conglomerates would ever have made it through?”
“……”
He frowned, but he couldn’t deny it.
“But it’s not over yet.”
“What do you mean?”
“Once a law is created, conglomerates immediately start looking for a way around it. If physical split-offs are blocked, they’ll create a new corporation and make an in-kind contribution. If affiliate listings are blocked, they’ll either acquire and grow a suitable company or list overseas.”
“So?”
“You need to rush follow-up legislation. Amend the Commercial Act so that a director’s duty extends from the company’s interests to the shareholders’ interests, and build investor protection and class action systems on the same level as the United States.”
Up until now, conglomerates had argued that Korea should lower corporate and inheritance taxes like the U.S. and adopt dual-class shares like the U.S.
But when someone suggested punishing companies like the U.S. does, or introducing punitive damages and class actions, they immediately blew up and claimed it would destroy business.
Oddly enough, American companies already living under those laws were doing just fine.
Namgung Seok looked stunned.
“You want me to do that?”
“Then who else would?”
“Hah……”
“Or are you just going to sit back and watch conglomerates slip through the law you made like eels? Then there’d be nothing stopping me from pulling something like this again.”
“……”
There are people like that in the world.
People who can’t stand seeing something wrong and don’t feel right until they’ve fixed it. It would be easier just to sit still and do nothing, but that isn’t how they’re built.
He was exactly that kind of person.
If he hadn’t been, he would have stayed a professor and lived comfortably without ever entering politics.
“It won’t be easy. By then the public mood will have cooled, and the conglomerates and the press will fight tooth and nail to stop it. One lawmaker alone probably won’t be enough.”
“You know that well. So what are you suggesting?”
“But if it were the president, wouldn’t it be possible?”
Apparently he hadn’t expected that at all, because Namgung Seok froze with his glass halfway lifted.
Then he gave a baffled laugh.
“You’re telling me to run for president?”
“The papers are already talking about it. Haven’t people around you been urging you to run?”
Namgung Seok said nothing.
Just as he couldn’t go back to being a professor now, he couldn’t go back to being a mere assemblyman, either.
He had gone head-to-head with Representative Im Chang-sik over the regulatory bill, and in the end, he had won.
He had already grown too large as a politician for the people around him to leave him alone, even if he wanted to stay still.
Like it or not, both the New Korea Party and the pro-Im faction in the Woori Kookmin Party had already started moving to keep him in check. On the other hand, the non-mainstream lawmakers in the Woori Kookmin Party had begun gathering around him.
“If you don’t challenge for the presidency, then Im Chang-sik will become president.”
“……”
Normally, at this point, he probably wouldn’t have had any intention of becoming president.
Come to think of it, before he got elected, he probably hadn’t even considered becoming a lawmaker.
He had only wanted to build a dormitory for students.
What made him decide to run for president was watching Im Chang-sik make a complete mess of the country.
But this time, I had changed things.
He must have realized clearly that Im Chang-sik was indecisive, opportunistic, and the kind of man who never took responsibility when things went wrong.
Watching him, I suspected Namgung Seok must have thought, I could do better than that guy.
But no one became president just because they wanted to.
No matter how capable you were, the timing and the luck still had to line up.
Even so, none of that mattered if you yourself had no will to seek the office.
To seize power, you needed a fierce desire for power.
Whether that desire was born of malice or good intentions made no difference.
Well, that was enough talking.
I’d done what I could. The choice was his.
“Then I’ll be going now. Enjoy your meal.”
I stood up first.
As I turned to leave, Namgung Seok’s voice came from behind me.
“What was the purpose of all this?”
He seemed curious why I had dragged him into this affair, and why I had come here to say all this.
Because of this incident, he had won over the entire nation. That was political capital money couldn’t buy.
If this had happened before, becoming president would have been impossible, but now it had become possible.
In a sense, I had made him a presidential contender.
But……
He didn’t really need to know that.
I wanted the politicians I liked to owe nothing to anyone. That way, they could do whatever they believed was right without hesitation.
I smiled. “It was only to make money. What other reason would there be?”
After watching me for a moment, Namgung Seok gave a slight nod.
“I see.”
I paid only for what I had eaten and left the sundae-gukbap restaurant.