The Chaebol Returns To The Presidency 1967 [EN]: Chapter 178

178. Ant Hell

“Let’s wait and see. It’s probably just a temporary dip. It’ll bounce back.”

He tried to calm his anxiety with forced optimism, but he chain-smoked out of nervousness.

“Whew~ This is too risky. I’m selling as soon as it bounces back to my initial investment.”

“Hey, you’re dead if you get scared in the stock market!”

He tried to erase his anxiety by acting tough.

But the next day, it hit the lower limit again.

The three friends who had bet everything turned pale.

“Lower limit for two days in a row!”

“Goddamn it, I’ve lost 66%!”

“Is the stock price crazy? Why is it plummeting like this?”

“Did Heophung Construction go bankrupt?”

“No way?”

The three of them called the person in charge of Heophung Construction stocks directly to inquire.

The person in charge replied:

– We are not bankrupt. We believe this is a temporary crash due to a rights offering [issuing new shares to existing shareholders] to expand our business.

The three were relieved to hear that they were not bankrupt.

But the problem was the upcoming liquidation date.

The law had changed, and the liquidation date, which used to be two months away, was shortened to one week to prevent speculative bubbles. If the stock didn’t rise by then and plummeted below the margin, they would not only have an empty account but also face civil charges and seizure of assets.

It was a kind of bankruptcy.

They were in a desperate situation where, if they didn’t pay the remaining 70% of the unsettled amount, they would be forced to sell at the opening price and end up with an empty account.

The next day, there was a slight rebound, and each day passed with nail-biting tension.

And the day before the liquidation date.

“This can’t be! It closed at -30%!”

“Shit, 3.3 times that is -99%! It’s a complete wipeout!”

“Oh my god, that’s all the money I had! I’m going to be kicked out of my house!”

“Damn it, that was the money I got from changing my deposit lease [a large sum of money given to a landlord instead of monthly rent] to a monthly rent!”

In the end, the three of them couldn’t pay the margin and were forced to sell, resulting in empty accounts.

To add insult to injury, the stock price soared to the upper limit for two days immediately after they sold, and then skyrocketed by +27% in three days, recovering to its original price.

The three of them were so devastated that they started drinking straight soju [Korean distilled spirit] from the morning.

“Hoo~ I’m going crazy. It hit the upper limit for two days after I sold! I should have sold my house to clear the margin and kept the stock! Ugh~”

They just emptied their soju glasses.

“If the stock price had continued to fall, I could have excused it by saying I chose the wrong stock, but to go bankrupt and then see it skyrocket, I can’t live with this! Ma’am, give me soju! Not just one bottle, give me a case!”

“Ah, to be blinded by money and end up like this! Greed was the devil, greed!”

They suffered irreparable economic damage, became debtors, their families fell apart, and they were driven to the streets.

Their lives were ruined by a single investment, or rather, speculation.

They blamed themselves or bad luck for why they went up and down and ended up with nothing.

*

00 Room Salon [a type of Korean hostess bar].

A group of stock manipulators, dressed in suits and wearing thick gold necklaces and Japanese watches, were having a liquor party.

The leader, nicknamed ‘Bumblebee,’ laughed with his Adam’s apple showing.

“Hahaha, the fleeced ants probably don’t even know why they were fleeced, right?”

Bumblebee graduated from the Department of Economics, joined a securities company, but was bought by a big shot and caught committing fraud. After being fired, he embarked on the path of a manipulator.

Bumblebee obtained information about the Heophung Construction’s rights offering from an insider with connections to his hometown, bought up the stock, and then artificially plummeted the stock price when the ants rushed in hoping for a rights offering surge. When the ants couldn’t clear their accounts and were forced to sell on margin, he bought those shares and made a profit of over 50% in ten days.

“Of course, boss. Who would suspect it when it fell due to the rights offering announcement? The surgery was a complete success, boss!”

Bumblebee flicked his subordinate’s head with his finger and sneered.

“That’s why you’re an amateur.”

“Yes?”

“The rights offering is just a superficial material, the key is the amendment to the Securities Act. It was possible because the liquidation date was brought forward to one week. If it were two months like before, we would need a huge amount of funds to hold it down for two months. Now, we only need to hold it down for a week, and the margin ants fall apart, so how economical is that?”

“Ah, that was the key. I still have a long way to go, boss!”

Bumblebee said.

“The next surgery is Dongjin Construction. I found out the rights offering schedule, so we’ll start buying up from tomorrow!”

“Yes, boss!”

“Now, let’s drink until we’re crooked! Call the girls!”

In the past, gangsters thrived with their fists, but now fists are declining, and they are evolving into intelligent criminals who commit economic crimes using their brains.

A major incident occurred that plunged individual investors into panic.

*

Myeongdong Stock Exchange.

After the market closed, news of the bankruptcy of Naju Trading Co. came in, and executives of the stock exchange held an emergency meeting.

“Is it definitely bankrupt?”

“Yes, they were supposed to pay by today to the transaction bank, but they didn’t, and Naju Trading Co. also contacted us saying they don’t have the money.”

“They said they won an apartment order in Daejeon last time and were on a winning streak for a few days, why did they suddenly go bankrupt?”

“Their main business is trading. They added the construction business to raise money, but they exported cement to the Philippines and didn’t receive payment. The local businessman ran away with the money. All local assets are frozen, making it impossible to raise funds.”

“Ah, the thing we were worried about has finally happened! Individual investors who jumped into construction stocks like moths to a flame with blind investments are going to be in agony.”

“This is a big problem. The market capitalization is over 40 billion won and there are more than 30,000 investors, the stock market will shake tomorrow.”

“This is not the time for this. We need to inform the Securities and Exchange Commission and the Ministry of Economy and Finance immediately.”

An emergency report was also made to the President.

The Minister of Economy and Finance asked the President for his opinion by phone.

– Your Excellency, what should we do?

“What is the opinion of the Ministry of Economy and Finance?”

– The general opinion is that a private company went bankrupt, and there was no other way because it had already gone bankrupt.

“Hmm, I agree with the Ministry of Economy and Finance. There are ups and downs in business, so there’s nothing we can do. Let’s let it flow according to the natural order.”

*

The next day, an article was published in the morning newspaper with large letters.

– Naju Trading Co. Bankrupt!

The attention of the stock exchange was focused on the opening price of Naju Trading Co.

Ding!

As soon as the market opened, Naju Trading Co. went straight to the lower limit.

Without a single share traded, there were a whopping 2.5 million shares in sell orders.

The company originally had a large number of shares, and the stock price had doubled due to the addition of the construction sector, so the market capitalization was large and the losses were enormous.

Institutional investors as well as individual investors turned pale.

“The stock price soared with the synergy of trading and construction, but it’s a bolt from the blue overnight!”

“Oh my god, I’m stuck with 3 million won! Not a single share has been sold!”

“Can stocks fall like this? There’s no guarantee of the principal at all!”

“Guarantee of the principal? Is the stock market a savings account? It’s high risk, high return!”

Investors who thought that stocks only went up after they woke up were in a panic.

After falling to the lower limit for three consecutive days without trading, the Securities Supervisory Service suspended trading.

As Naju Trading Co. entered liquidation proceedings, investors’ investments became worthless.

The shocked stock market fell across the board.

In particular, the decline in construction stocks, which had soared since the beginning of the year, was significant.

Sorting the wheat from the chaff began, and a long period of adjustment began.

*

Han River Bridge.

On a dark night, a man stared at the turbulent river water for a while from about halfway up the bridge pier.

The man sighed deeply, took off his shoes, and threw himself off the bridge pier.

Splash!

News of a suicide due to despair over stock failure was published as a social news article in the newspaper.

The ants fell into hell.

*

Cabinet meeting.

The Minister of Economy and Finance reported.

“There are no signs of chain bankruptcies other than Naju Trading Co. The impact on the economy due to the company’s sole trade deficit is limited.”

The President said.

“That’s a relief.”

“However, due to the aftermath of the bankruptcy, the stock index, especially the construction sector, has been adjusted, and 10% of the market capitalization has evaporated.”

The Minister of Trade, Industry and Energy said.

“The bankruptcy is regrettable, but I think this opportunity has served as a bitter pill to raise awareness that blind investment and moth-like investment are dangerous. It is the inevitable result of reckless speculation that ignores corporate productivity.”

The President said.

“That’s true, but I think we need to approach it more fundamentally.”

“…….”

“It is often said that the stock market is the flower of capitalism. The economy and the stock market are bound to grow together. It is certain that it will rise in the long term, repeating ups and downs, but in the process, many individual investors will become ruined and families will fall apart.”

During Chairman Wang’s era, when the bubble in the stock market, which had been growing rapidly due to construction and exports due to the oil shock, subsided, investment bankruptcies followed one after another, and suicides also occurred.

Individual investors also collapsed during the IMF crisis [1997 Asian Financial Crisis].

In a capitalist economy, some people are born fabulously rich overnight, while others are reduced to homeless people overnight, so it was an unavoidable side effect.
The President was well aware that it was time to find a fundamental solution to compensate for the speculative disadvantages of the financial industry.

The President took out a pile of books and piled them on his desk.

“These books are textbooks and major books related to economics and society in elementary, middle, high school, and university.”

“…….”

The attendees were puzzled as to why the President had suddenly brought out textbooks.

“I stayed up all night yesterday and looked through all these books. But there’s only elegant economic knowledge and a lot of graphs.”

“…….”

“Financial capital is like the blood vessels of industry, so it must be circulated well, but there are only a few lines of advice not to speculate. And that’s the end of it. There’s no suggestion on how to do it, so it’s just saying don’t do it unconditionally. Does this make sense in reality?”

“…….”

“Minister of Economy and Finance, Minister of Education!”

“Yes, Your Excellency!”

“Do you have any subjects that teach you how to buy stocks, select stocks, and invest in your home?”

“Uh, no.”

“It’s a dream for ordinary people to buy a house. But why don’t you teach them how to do that?”

“…….”

“We encourage public offering of stocks, support the treasury stock system, and revitalize the stock market, and the interest of salaried workers is entirely focused on wealth management and stock investment, and in the future, various personal financial investment products will be poured out, but why don’t schools teach such investment education?”

“Your Excellency, it seems too materialistic to put real estate investment and stock investment in textbooks….”

“Let’s be frank. The people here are public officials who have learned as much as they can, but do you live only looking at your salary?”

“…….”

“You buy real estate and invest in stocks! You even find out inside information and commit illegal acts at the risk of your own livelihood!”

“…….”

“But you teach the people that if you work diligently and save money, you will become rich.”

“…….”

“Can you buy a house by saving your salary?”

“Hmm, hmm.”

“Prices always rise more than wages. Wages are only a part of the product price, so you know that you can’t keep up with the product price increase. That’s why you do wealth management.”