The Financial Times is a daily British business newspaper with over 100 years of tradition.
Porter MacKellan was a stock market specialist reporter there.
He was summoned to the editor’s office now. The reason was the article he had written a day before the Brexit vote.
As soon as the editor saw him, he shouted, “What? Brexit vote rejection certain? Massive boost for European markets? If you’re not sure, better stay quiet. You said it was certain, so what’s this?”
He received a barrage of complaints over the phone at the newspaper office for several days. Some even claimed they suffered significant losses because they believed the article and invested based on it, demanding compensation.
Porter lowered his head. “I’m sorry.”
Though he said those words, he felt unjustly accused.
‘If everything was so certain, why am I even a journalist? I made money by investing.’
That article, on second thought, was based on interviews with financial experts in the UK, not his personal opinion.
‘Well, I never believed those so-called financial experts anyway.’
Recalling the time during the 2008 financial crisis when CDOs were touted as safe, followed by Lehman Brothers’ bankruptcy a week after an article was published, he remembered similar complaints flooding in.
Regardless, as he had also believed in the experts and wrote the article endorsing the certainty of the UK remaining in the EU, he had no choice but to accept it.
“Go do some reporting!”
“Understood.”
Porter left the editor’s office, gritting his teeth.
‘I’ll really dig up a hot scoop this time!’
He called acquaintances working in financial firms and political circles to find new story angles. However, it seemed everyone had the same story. With articles forecasting the future pouring in from all directions, finding a unique angle was proving difficult.
Although he could have crafted something by tweaking existing content, it didn’t suit his character. He needed a powerful punch that he could confidently present to the editor.
While still searching for a story idea, he happened to hear something from a friend working at the London Stock Exchange.
“Have you heard of OTK Company? It seems like they made a huge profit by dumping a large amount of pounds right before.”
On the day of Brexit, there was a peak in exchange rate fluctuations. It wouldn’t be surprising to make a big profit at that time, but something felt strange…
“Tell me more about it,” Porter said.
He had heard of OTK Company before. It was quite a famous company in the venture capital industry. He knew they had invested in several well-known startups in the UK.
While conducting his investigation, he stumbled upon an astonishing fact. About two months before the Brexit vote, OTK Company had taken loans from several financial companies using their ownership stakes in the companies they held as collateral. The amount exceeded 10 billion dollars.
Over the course of about a month, they raised funds and then engaged in FX margin trading, selling pounds in the foreign exchange market and buying yen.
It made sense if they had predicted Brexit and acted accordingly, up to this point at least.
However…
The shocking event occurred on the day of the vote count.
During the vote count, with high remain figures coming out, the pound rose and the yen fell. In this situation, it is estimated that OTK Company dumped over 200 billion pounds.
Calculations suggest that they bet the remaining funds with leverage of about 40 to 50 times. Most likely, a substantial portion of the profit was made through this bet.
Despite covering many financial market events in the past, this was a unique case for Porter.
‘Without knowing the outcome would be reversed…’
If this decision was made by a politician, one would assume they had obtained some prior information. However, this was the result of a public vote.
It was impossible to predict how the vote counting process would unfold.
There was only one conclusion that could explain this situation.
‘Does the CEO possess incredible foresight and investment intuition?’
Predicting Brexit wasn’t that remarkable; even among experts, a few had warned that Brexit could become a reality.
Anyone can make predictions, but very few can act on them.
If you were to ask someone to bet their entire fortune on a prediction made by an expert who foresaw the Brexit, no one would dare to answer.
Porter smirked.
“How can this even happen?”
As I continued my investigation, it became clear that this wasn’t the first time.
The first time OTK Company appeared in the financial markets was in Korea. During the L6 incident where Seosung Electronics’ premium phone was discontinued due to explosions, they made huge profits through leverage and short positions just like now. Subsequently, they ventured into startup investments worldwide with the profits they made.
“Making money with extreme short positions, building long positions with that money, and then taking extreme short positions again?”
Investors have different investment preferences. However, there has never been an investor who invests in this manner.
“This is completely sensational.”
Portner spent two sleepless nights writing the article and presented it to the editor.
“Is this for real?”
“The amounts might vary a bit, but the rest is certain.”
“So, a single investment company made $30 billion betting on the yen rising and the pound falling?”
The editor’s eyes sparkled. With years of experience, he sensed the scoop.
Portner quickly said, “Editor! This must go on the front page of tomorrow’s newspaper right away.”
The editor replied cautiously, “We should do some follow-up reporting before publishing…”
He seemed frustrated as he lowered his head slightly.
“Did we cover this alone? Wall Street Journal, Washington Post – they’ve all caught wind and have been reporting on it. It’s now about who breaks the news first. Even a minute’s delay means we’ll end up just copying others, you know?”
“Hmm.”
It’s true. Time is of the essence in sensational stories
Not just a minute, but even a single second’s delay can mean losing out on the scoop.
The editor picked up the phone and gave the order, “Leave the front page empty for tomorrow’s paper.”
The next day.
A headline-grabbing article was featured on the front page of the Financial Times.
[“Who Attacked the UK Foreign Exchange Market?”]
***
The reports from Tottenham were enough to turn the entire UK upside down.
After the first report in the Financial Times, related articles poured in.
[“OTK Company Reaping $3 Billion Profit in Foreign Exchange Market”]
[“Who is OTK Company?”]
[Worst Incident Since Quantum Fund!]
[Was the UK Government’s Response to the Foreign Exchange Speculator Appropriate?]
[“Otaku’s Air Raid on the UK.”]
[OTK Company Suspected to be of Japanese Origin]
The British people were furious.
Already confused due to Brexit, they were outraged by mysterious figures making enormous profits in their own foreign exchange market.
The aftermath reached the political arena.
Ultimately, the UK Chancellor of the Exchequer stepped in.
“There is no issue with the financial stability of the UK. The government barely suffered any losses in foreign exchange reserves due to this incident. The government will crack down on speculators disrupting the financial market.”
Similar incidents also occurred in Japan.
Despite the actual events unfolding in the UK and the EU, global investment funds flocking to safe assets caused a surge in the yen, resulting in damages.
The Japanese government mobilized various measures to raise the exchange rate and the Minister of Finance issued a stern warning.
“We will strengthen monitoring of foreign exchange speculators. Financial authorities are prepared to take all necessary measures for market stability.”
***
Watching TV, Taekgyu said,
“They won’t let the speculators go unpunished.”
“Even if others don’t know, they shouldn’t say these things.”
Haven’t they ever thought about how they’ve been plundering emerging countries all this time?
South Korea has also been exploited by global capital for a long time. As a country with an export-driven economy, South Korea has a high level of openness compared to the market size, making it easy for money to be taken out whenever needed.
Would it be fitting to call it the ATM of Asia?
During the IMF crisis, foreigners swept up undervalued shares of major corporations. Among them were considerable investments from the UK and Japan. In particular, despite the Korean government’s request for maturity extension, Japan unexpectedly converted investment funds into dollars and swiftly withdrew, hastening the foreign exchange crisis.
Similar situations recurred during the 2008 financial crisis. Like water flowing from a high place to a low place, it is natural for global investment funds to move towards higher profits.
We also put money where profits were and simply made money.
“…although we made quite a bit of money.”
News coverage poured in not only from the UK’s BBC and Japan’s NHN but also from the US’s CNN, China’s CCTV, and others, all discussing OTK Company. While aware that making money from short positions would attract criticism, being globally criticized in this manner was unexpected.
“If you go to the UK, you might be in trouble.”
“Uh-huh.”
If one were to reveal themselves as the CEO of OTK Company in London, it seems like they might face public outrage at Trafalgar Square without it being unusual. They would become the most criticized investor in the UK after George Soros!
Is this something to be pleased about?
One fortunate aspect is that everyone perceives OTK Company as Japanese-funded. This led to untimely anti-Japanese sentiments among some UK netizens. Conversely, Japanese netizens collectively welcomed it.
– OTK Company was a Japanese company?
– That’s right. So, you know they invested in OTK Games, right?
An otaku reaching out to the world!
Otaku Company, cheers!
The otaku conquered England. Now, let’s conquer the world.
Taekgyu was puzzled.
“What are these? Why do they like them?”
“I don’t know.”
Anyway, from our perspective, it was a good thing. The crucial moment that led to this misunderstanding was Taekgyu’s investment in a Japanese game company.
Was that investment a stroke of genius?
Thinking so, my phone rang.
Ring!
I answered a call from Senior Sangyeop.
“Hey, Jinhoo. What are you up to?”
“I’m watching the news. Are you at work, senior?”
“No. I can’t go to the company.”
“Why?”
“When I tried to go to work, reporters were camping in front of the office!”
***
While the world was buzzing about OTK Company in the global financial market, the issue in Korea was K Company.
K Company purchased put options on global markets just before the Brexit vote, earning more than four times their investment. It was a result of taking advantage of financial markets worldwide.
For a Korean investment company to achieve such results in the global market was unprecedented.
When the news spread, Korean netizens cheered.
“After always being ripped off by foreign capital, we finally did something.”
“Is it K Company because it’s Korea Company?”
“But what kind of company is it?”
“It specializes in venture capital. It’s the largest shareholder of Edm Entertainment and Bansom, and the main investor in TMEP.”
An investment company did that, what exactly do major securities firms in Korea do?
Right. They were wrong again on their Brexit predictions and only ended up with losses. I feel like a fool for trusting their advice and investing. It seems like I might have better luck tossing dice.
Who is the CEO?
I heard he’s a Korean University graduate named Park Sang-yeop.
Oh! Korean University indeed!
Is it really true that they earned 4 billion dollars?
I heard they made more than 5 trillion won.
The media and finance industry both paid attention to K Company. Just one year ago, the company was unknown, but now it has become the most famous investment company in Korea. And Senior Sang-yeop has risen in fame as a genius investor in the media.
Amid various events, there was another bombshell-like news in the Korean financial industry. James C. Goldman, CEO of Golden Gate, known as a reclusive investor, had never been in the public eye and had avoided interviews with the media. However, in a written interview with The Wall Street Journal, he revealed, “I plan to establish a branch in Korea within a few months. We have already completed all preparations.”
Golden Gate owns three large buildings on Tehran Road. Releasing one of the buildings whose lease had expired, they will be opening a branch there. While they have branches in China and Japan, Korea only had small branches handling banking operations. The fact that the world’s largest IB is establishing a branch in Korea shows the high status of Korean finance. While the politicians welcomed this move, domestic financial institutions were all anxious.
Golden Gate is larger than all Korean IBs combined. It was uncertain how aggressively they would operate, but it was clear that the competition would intensify in the future.
The Securities Association stated that they should not give privileges to foreign securities firms and must adhere to Korean regulations and laws, just like domestic securities firms.
I recalled the words I heard from Chase Southwell before.
“Maybe there will be good news for each other before the end of this year.”
He must have said something like that.
Taek-gyu asked, “The Korean business was originally managed by the Asia office. What will happen to the employees working there?”
“Some of them will probably move to Korea.”
Taek-gyu smirked at my response.
“What about our sister?”
When the establishment of Golden Gate’s Korea branch was announced, the Asian office in Hong Kong buzzed with excitement. As they had been in charge of Korean-related operations here, they were likely to face significant changes.
Oh Hyun-joo received a summons and headed to the branch office.
As she opened the door and entered, Chase Southwell stood up from his seat and greeted her.
“I suppose you can guess why I called you.”
Hyun-joo nodded.
“Yes.”
‘Probably because of the assignment to the Korea branch.’
Personally, she wanted to gain more experience here. However, that was not something she could decide.
Looking at Hyun-joo, Chase said, “You will have to go to Korea.”
She already anticipated this.
She nodded, but his next words followed.
“Can you take on the role of the Korea branch manager?”
Confused, Hyun-joo stammered, “Um, yes?”
I am back