The Conglomerate Family Became A Villain [EN]: Chapter 287

287. The End (5)

Tokyo International Airport.

“Thank you for your hard work.”

The person bowing deeply was Kato Hitori, the Tokyo branch manager of Victoria Fund. Like Yu Tanaka, she was one of the first employees at Victoria Fund.

John Pierre had worked with her for nearly a year and knew she was someone he could trust.

“Ms. Kato, you’ve worked hard as well.”

Kato Hitori didn’t straighten up even after the final greeting.

“Ms. Kato?”

John Pierre raised his voice slightly, and Kato Hitori said,

“We all thought we were going to be fired.”

Since Victoria Fund was withdrawing from Japan, she had expected the branch to be closed and all employees to be laid off.

John Pierre responded in a gentle voice,

“Fired? Aren’t you all comrades who fought together?”

At those words, Kato Hitori’s voice choked up slightly.

“Mr. Pierre…….”

John Pierre bowed to her and said,

“I look forward to working with you in the future.”

He left the Tokyo branch in her hands and turned away.

Jung Hyun-woo was waiting for him in front of the gate.

“John, I was a little nervous.”

John Pierre tilted his head and asked,

“Is there anything for Charlie to be nervous about?”

“I thought there would be a scene like in the movies.”

John Pierre understood Jung Hyun-woo’s words and shook his head.

“Ms. Kato has a lover. It’s rude to look at her like that.”

Jung Hyun-woo had been worried that John Pierre and Kato Hitori had become romantically involved during the year. He scratched his head and said,

“I misunderstood.”

“I’ll take it as a compliment if it felt like a scene from a movie.”

The two finished all the short selling and left Japan for New York on January 2nd.

January 3rd.

Jung Hyun-woo and John Pierre arrived in New York and headed to Victoria Fund headquarters before even recovering from their jet lag. And there they met Jeremy Spin.

“The die is cast.”

Jeremy Spin nodded at Jung Hyun-woo’s words.

“It seems so.”

Victoria Fund had used a large amount of funds for short selling, but not all of their assets were in short positions. A significant portion of their assets was reinvested in American IT companies.

“I heard there was a Santa Rally last year.”

Jung Hyun-woo and John Pierre were in Tokyo, so they couldn’t experience New York’s Santa Rally [a surge in the stock market during the last few trading days of December].

“It was spectacular.”

“Was it that much?”

“It rose a whopping 12% in one month.”

A 12% increase in one month.

This was a rate of increase comparable to the Nikkei [the stock market index for the Tokyo Stock Exchange].

“Then you must have made a lot of profit.”

“$120 billion increased to $140 billion.”

$20 billion in profit.

Victoria Fund’s return on investment was slightly above average.

“What are the total assets under management?”

“About $200 billion.”

Victoria Fund’s assets had barely increased in a year and a half.

Considering the inflow of investment funds through various channels last year, it could be said to be negative growth.

“Victoria Corporation’s stock price may fall.”

Jeremy Spin sighed briefly.

“Hoo… If it weren’t for Charlie’s Nikkei short selling, the assets under management would have already surpassed $250 billion.”

The losses incurred in the Japanese stock market over the past year were greater than expected.

John Pierre cleared his throat slightly.

“Jeremy, we can make up for it if the short selling is successful.”

Jeremy Spin responded coldly to his words.

“Of course, it has to be successful. If it’s not successful, the repercussions will be significant.”

The two were friends, so they spoke comfortably. This didn’t change even when Jung Hyun-woo was present.

“Jeremy, what do you think?”

At Jung Hyun-woo’s question, Jeremy Spin replied,

“I think I’ve already told you our judgment last time.”

As a Wall Street investor, he was looking at the market from a conservative perspective.

“You’re saying it’s not a good investment.”

“Not many people on Wall Street will be able to understand Charlie’s investment.”

John Pierre said to Jeremy Spin.

“Jeremy, the atmosphere in Japan was changing little by little.”

Jeremy Spin turned to him.

“You mean the market is overheating?”

“That’s right.”

“But last year, the Nikkei hit an all-time high.”

As Jeremy Spin said, the Nikkei index reached an all-time high of 38,915 points. And this record will remain a milestone of the bubble that has not been broken even after 30 years.

Jung Hyun-woo said to the two of them.

“The Nikkei may rise again this year.”

It’s too early to rejoice.

Nothing is certain yet.

The two agreed with this opinion.

“Charlie, short selling is originally a long-term battle.”

“I don’t think you can win if your investment sentiment wavers. Even if it rises in the short term, you have to look at it in the long term.”

Jung Hyun-woo nodded and responded to their words.

“That’s right. You can’t win if your investment sentiment wavers.”

Short selling looked glamorous, but it was actually a lonely fight.

‘Because you’re often on the opposite side of everyone.’

Moreover, the odds of winning were not high.

Short sellers who have won often appear in the media such as TV or magazines, but they are only a small minority who have succeeded.

Most short sellers couldn’t overcome the market’s heat and either raised a white flag or went bankrupt.

“Charlie, this year’s fund management will focus on IT companies.”

Investing in American IT companies was the path suggested by Jung Hyun-woo.

Jung Hyun-woo agreed with Jeremy Spin’s policy.

“Do so. And John, I’d like you to take charge of the Chinese side.”

Victoria Fund had acquired shares and bonds of Chinese companies from JP Morgan last year.

John Pierre raised his voice with a disappointed look.

“China after Japan?”

He had originally planned to retire once the Japanese investment was completed.

Jung Hyun-woo replied in a gentle voice.

“I’m not saying you should live in Beijing. I’m saying I want you to manage it until the Chinese investment is established.”

He didn’t have to go on a long-term business trip to the Chinese branch like he did with the Nikkei short selling.

“Since the Chinese investment is not small, should we establish a Chinese branch?”

“Of course.”

“Where would Charlie like it?”

John Pierre wanted to ask where to establish the Chinese branch.

Jung Hyun-woo thought for a moment and then replied.

“The capital of China is Beijing, but the companies are not there, so Shenzhen or Shanghai would be good.”

John Pierre listened to his words and immediately took out a pen and wrote it down.

“Shenzhen and Shanghai. I understand.”

The three people’s attention was gradually moving from Japan to China.

* * *

January 4, 1990.

The Nikkei index failed to continue its year-end rise and closed down, falling by 200 points.

“It didn’t rise and closed down.”

“It’s only 200 points. It’s not even a short-term correction.”

However, the fact that it fell by 0.6% gave strength to the statement that it was not even a short-term correction.

“It will be different tomorrow.”

“I hope so, but I have an uneasy feeling.”

The atmosphere at the Tokyo Stock Exchange was chilly. And a few days later, that chill became a reality.

“I can’t believe it.”

The Tokyo Stock Exchange’s electronic display board was full of blue letters [indicating falling stock prices].

“Can it fall this much?”

“It’s because of Victoria Fund.”

“Victoria Fund’s short selling?”

“Don’t you think it makes sense to fall like this otherwise?”

Some dealers believed that the Nikkei index was falling because of Victoria Fund’s short selling.

However, Victoria Fund had not shorted a single share in 1990.

January 12, 1990.

Japanese Cabinet meeting.

“The Nikkei index has reversed its rise and is falling.”

The Nikkei index, which had risen to 38,915, closed at 37,800.

“I think it’s a healthy correction.”

“It’s down about 1,000 points, so investors will regain their composure.”

The Nikkei’s decline rate for the new year was about 2.5%.

“How about real estate?”

At Prime Minister Kaifu’s question, the faces of the cabinet members darkened.

“Real estate is still not being controlled.”

“Is that so?”

“It feels like the upward trend is spreading to Kansai [the region of Japan including Osaka, Kyoto and Kobe].”

“That’s not good.”

In January 1990, Japan’s real estate fever was not easily subsiding.

The surge that started in Tokyo had spread along the Shinkansen [high-speed rail line] to the Kansai region, including Osaka.

“What should we do?”

At Prime Minister Kaifu’s question, the cabinet members replied.

“Your Excellency, how about watching the situation for the time being?”

“Since the Tokyo stock market is falling, real estate will soon be controlled.”

“Interest rates have been raised, so the market can’t ignore it.”

The Japanese cabinet was mainly optimistic rather than pessimistic. They believed that the Japanese economy could make a soft landing rather than a crash or recession.

Of course, Jung Hyun-woo’s judgment was different.

Boston, USA.

Jung Hyun-woo was looking at the snow falling from the sky.

“I heard the Japanese stock market fell?”

At Sera’s question, he turned around.

“It only fell by about 2%.”

“John said it fell more?”

“Did you talk to John?”

“Yesterday.”

Sera stood beside him and said,

“It seems to be snowing a lot this year.”

“I’m sorry I couldn’t be by your side at Christmas.”

“Why are you apologizing for that?”

Sera quietly leaned her head on his shoulder.

“I’m glad Charlie’s face is brighter.”

Jung Hyun-woo reached out his right arm and hugged her slightly.

“Our success may be a frustration for someone.”

“You mean short selling?”

“No matter what euphemism you use, short selling is ultimately betting on recession and decline.”

The collapse of the Japanese bubble came sooner than he expected.

January 18th.

The Nikkei index collapsed to 36,726 points, sending chills down investors’ spines.

“The 37,000 line has collapsed.”

“How much has it fallen from last year’s high?”

The Nikkei index had recorded a minus 5.4% since December 29, its historical high.

“A minus 5% is a bit too big to be called a temporary correction.”

“But it hasn’t fallen by 10% yet.”

Japanese investors were confused, not knowing whether it was a temporary correction or a sign of a long-term decline.

John Pierre called Jung Hyun-woo early in the morning.

“Charlie, the Japanese stock market has fallen again.”

His voice was excited.

“Has it fallen by about 5%?”

Victoria Fund had shorted nearly $80 billion in the Nikkei, and was making over $8 billion in profit this month alone.

“Should we start buying back shares soon?”

Jung Hyun-woo replied coldly to his question.

“John, the Nikkei’s decline hasn’t even started yet.”

He had no intention of buying back shares at all.

“Um, Charlie, at what point are you thinking of buying back shares?”

“In 2 or 3 years… or maybe even later.”

John Pierre narrowed his brows at his answer.

“Charlie, doesn’t that mean the bubble will completely collapse?”

“I think that’s very likely if the Japanese real estate collapses.”

The Nikkei index was falling, but Japanese real estate prices were rising instead.

Japanese fund managers explained this as funds moving from the stock market to real estate.

“The Japanese real estate market is still solid.”

John Pierre felt sick every time he confirmed the rise in Japanese real estate.

The reason was that Victoria Fund’s real estate holdings were the largest in the world until they started withdrawing from Japan.

“There will be cracks in real estate soon too.”

John Pierre was skeptical of his words.

‘Are you saying Japanese real estate could also collapse?’

He had predicted that Japanese real estate would not collapse even if it did not rise.

“Hmm, I understand. Then I will strengthen monitoring of the Japanese real estate side as well.”

The reason he left a considerable number of people in Victoria Fund’s Japan branch was for this monitoring.

“John, please.”

“I will do my best until I retire.”

The point at which the Japanese short selling was completed was also his retirement point. He was going to handle all the work thoroughly until then.

* * *

March 21, 1990.

Japanese Cabinet meeting.

Prime Minister Kaifu looked at the cabinet members and let out a long sigh.

“Hoo… The criticism from the media is endless.”

The Nikkei index had fallen below 35,000 points, but real estate prices in the Kansai region, including Osaka and Kyoto, had risen by 50%, entering a second real estate boom.

“There are many stories that money from the stock market has gone to real estate.”

The cabinet, including Prime Minister Kaifu, was most concerned about real estate, not the stock market.

“Interest rates have already risen to nearly 6%.”

This meant that interest rates alone could not control real estate.

“Umm…….”

“Hoo…….”

Only sighs were heard from everywhere.

Minister of Posts and Telecommunications Senpachi clenched his fist and opened his mouth.

“Only total volume regulation will work.”

Total volume regulation [a policy to control the total amount of lending in the economy].

This meant that the government would control the total amount of loans in Japan.

“Senpachi, you…….”

A senior cabinet member tried to stop him, but Minister of Posts and Telecommunications Senpachi was adamant.

“This is not the time to argue about capitalist ideology. After the Kansai region rises, where will the money go? Are we just going to watch Hokkaido or Fukuoka rise? Everyone needs to wake up! Once all of Japan has risen, no measures will be effective!”

He was one of the strongest among the hardliners.

Prime Minister Kaifu closed his eyes slightly.

“What do you all think?”

He wanted to ask if the others in the cabinet agreed with Minister of Posts and Telecommunications Senpachi’s opinion.

“I don’t think there is any other way than loan regulation at this time.”

“I wonder if we should take a slightly looser approach to the total loan limit.”

Prime Minister Kaifu’s gaze turned back to Minister of Posts and Telecommunications Senpachi.

“It seems that we have no choice but to implement the total loan system as you said. Would you like to take charge of the detailed policies?”

Minister Senpachi of Posts and Telecommunications sighed briefly and replied.

“I think there is a better person to implement the detailed policies of the total loan system than me.”

“Who is it?”

“The Minister of Finance.”

“You’re saying to leave it to Hashimoto.”

Finance Minister Ryutaro Hashimoto was called the economic expert of the cabinet.

“I understand. Then I will leave the total loan system to Hashimoto.”

The total loan system was the most powerful card that the Japanese government could take out.

However, there was one mountain to climb in order to implement this total loan system.

That was the Bank of Japan.

March 25, 1990.

Bank of Japan Governor’s office.

“The government is going to regulate loans?”

“It’s regulating the total amount of loans.”

“That’s ridiculous. Is the cabinet denying the capitalist economy?”

Bank of Japan Governor Tsuchida strongly protested.

“It’s His Excellency’s will.”

“I respect Prime Minister, but Japan is not a dictatorship.”

The person dealing with Governor Tsuchida was Finance Minister Ryutaro Hashimoto, the de facto leader of the cabinet.

Ryutaro Hashimoto was a powerful figure who would later become Prime Minister of Japan after serving as Minister of Finance and Minister of International Trade and Industry.

He had been entrusted by Prime Minister Kaifu with the implementation and management of the total loan system.

“Absolutely not.”

Finance Minister Ryutaro Hashimoto sighed briefly.

“Hoo… If that’s the case, there’s only one way.”

“What are you going to do?”

“I have no choice but to change the governor.”

This meant that he would implement the total loan system even if he had to change the governor of the Bank of Japan.

“Th, that!”

Finance Minister Ryutaro Hashimoto raised his voice.

“Japan’s real estate is like it was right before the Great Depression. Everyone will die if it bursts. Tsuchida, can you take responsibility for this bubble?”

Governor Tsuchida bit his lower lip.

“Are you saying it’s all my responsibility?”

“The Prime Minister already knows that you are connected to construction companies.”

“It’s a false charge.”

“Are you taking the Cabinet Intelligence and Research Office lightly?”

The Cabinet Intelligence and Research Office was the best intelligence agency in Japan.

“Don’t tell me you’re wiretapping?”

“Tsuchida. Don’t try to know too much.”

Finance Minister Ryutaro Hashimoto attacked Governor Tsuchida through various channels.

In the end, Governor Tsuchida raised a white flag.

March 27, 1990.

The Japanese government and the Bank of Japan abruptly announced the implementation of the total loan system. Immediately after that, as expected, the Tokyo stock market crashed.