Seok-won, dressed in a suit tailored to fit his frame perfectly, stood before a floor-to-ceiling glass window overlooking the deep blue sea in the distance. With one hand shoved into his trouser pocket, he was on the phone with John Porter, the branch manager in Japan.
[Last year, Japan's trade surplus fell to 6.6115 trillion yen, marking a third consecutive annual decline and hitting its lowest level in 18 years. The shock sent both the Nikkei and the TOPIX indices down nearly 1 percent from the previous day.]
"It's already tough after the bubble burst, and now the United States, one of their key export markets, is heading into a recession. On top of that, the Argentina situation has piled on. It must be hell for them."
[That's right. In particular, as credit risks tied to massive volumes of non-performing loans accumulated during the bubble economy era have surfaced, bank stocks across the board—regardless of size—such as UFJ Holdings and Mitsui Sumitomo have plunged sharply and remain stuck in a prolonged slump.]
Porter continued, smiling as he spoke.
[Following the boss's instructions, we've been aggressively buying put options not only on the yen but also on bank stocks, and we've also set up short positions. Thanks to that, we're currently posting returns of over 30 percent.]
A faint smile formed on Seok-won's lips as he adjusted his grip on the phone in his hand.
"The scale is simply too large for them to resolve the non-performing loan issue easily, so keep the short positions in place for the time being."
[Will you be holding on to the yen as well?]
"To deal with bad loans and break out of deflation, the Japanese government will have no choice but to print more money and inject liquidity. On top of that, if they want to boost exports, a weaker yen works in their favor. At the very least, the weakness will persist through the first half of the year."
[As you say, if the yen tries to spike, it seems likely the Japanese government will step in and push it back down.]
Porter nodded in agreement.
Seok-won looked out through the wide glass window at the rolling waves and a pair of seagulls gliding lazily through the air before speaking.
"However, if the United States moves to stimulate its economy and the war on terror expands, demand for the yen as a safe-haven asset will increase. That will drive up volatility, contrary to the Japanese government's intentions. So if it reaches 135 yen to the dollar, close out the positions and get out."
[Since exchange rates are even harder to predict in terms of direction than stocks, it wouldn't be a bad idea to avoid being too greedy and pull back at a reasonable point.]
Porter added with a hint of laughter in his voice.
[Even if we do that, earning over 300 million dollars in profit would still be quite a windfall.]
Seok-won, too, let a curved smile form at the corner of his mouth.
"Once you close out the positions, don't pull the capital. Switch straight into a long position."
[I figured as much.]
"When a money-making opportunity is sitting right in front of you, just standing by and watching means you have no right to call yourself an investor."
[That's absolutely right.]
Porter spoke again with a subtle smile.
[If Japan wants a weaker yen but is pushed in the opposite direction by the United States, pushing the exchange rate higher, that would put the Japanese government in an even tougher spot.]
"That's right."
As a result of this quasi-forced yen appreciation, even export companies that had been barely holding on lost their competitiveness and fell into serious trouble. Japan was unable to escape the deep, dark mire of prolonged economic stagnation, later known as the Lost Thirty Years.
[And there's one more piece of bad news.]
"You're talking about Speed Retailing's stock dropping."
[That's correct.]
Speed Retailing, the parent company of the fast fashion (SPA) brand Uniqlo, was one in which the Eldorado Fund held a 20 percent stake.
[With the leading economic index remaining below 50, signaling contraction for six consecutive months, and household spending down 0.2 percent month-on-month, the entire retail sector has been showing negative movement. Concerns were already high, but after Speed Retailing warned of deteriorating performance, the stock plunged 15.94 percent yesterday and has continued to trend weakly today as well.]
Despite Porter's cautious tone, Seok-won did not seem particularly bothered by the news of the stock's sharp decline.
"The stock dropping that much is good news."
[What?]
At Porter's puzzled reaction, a deep smile spread across Seok-won's lips.
"It's a chance to scoop up a good stock at a bargain, so go ahead and buy more Speed Retailing shares."
Since the purchase price was low and the position was still in profit, Porter had naturally assumed Seok-won would order them to sell the stake before the price fell any further. The instruction to do the opposite left him visibly taken aback.
[Are you saying we should buy more of the stock?]
"That's right."
[Even though Japan's consumer indicators are worsening, and the company itself has issued a gloomy outlook for its performance?]
Seok-won responded with an air of ease.
"What do you think people do when the economy turns bad?"
[Well… as their wallets tighten, they try to cut back on spending and save money, don't they?]
Porter replied, sounding as though he could not quite follow.
"The collapse of the bubble economy flipped the consumption habits of Japanese consumers who used to splurge on luxury goods and travel abroad at will. That shift is not bad news for Speed Retailing. It's good news."
[...?]
"What kind of business model does Uniqlo, which Speed Retailing operates, use?"
Realization dawned on Porter, and he let out an exclamation of admiration.
[You're saying that fast fashion, which mass-produces and distributes clothing at affordable prices in line with the latest trends, will actually gain more attention during an economic downturn.]
"That's exactly right."
Seok-won deepened the smile at the corner of his mouth and continued speaking.
"Even if they don't carry famous brand logos, clothing that isn't out of step with trends, offers reliable basic quality, and comes at a low price is bound to attract consumers whose disposable income has shrunk. On top of that, their strategy focuses on core items like T-shirts, knitwear, and jeans that anyone can wear, regardless of age or gender, which makes it even more likely that sales will grow."
[Now that you explain it, that makes sense. And since they produce and sell only limited quantities each season, unlike traditional apparel brands, they carry less inventory risk, which gives them an advantage in a downturn like this.]
"That's why now, when people are dumping the stock out of fear without recognizing Uniqlo's strengths, is the perfect chance to buy in cheap."
[I see. I almost sold a stock that's likely to surge later and would have ended up regretting it.]
"Before they realize their mistake and the price rebounds, go ahead and buy about 10 percent more."
[Understood.]
After giving a few more instructions and ending the call, Manager Han Ji-sung stepped over and spoke.
"Chairman, there isn't much time left until the scheduled launch."
Seok-won rolled up his sleeve and checked the watch on his wrist.
"Time flew by. Let's go before we're late."
As he said that and moved ahead first, Manager Han Ji-sung followed closely behind.
Passing through the reinforced glass doors guarded by security personnel, they entered the Mission Direction Center (MDC), where a massive main screen immediately came into view.
As if to prove that the rocket launch was imminent, dozens of researchers wearing headsets sat before consoles glowing with a bluish light, moving busily as they checked the systems under their respective responsibilities.
At the center of the main screen, real-time footage showed Uranus, the nation's first domestically developed space rocket, standing tall on the launch pad while venting clouds of white vapor.
"Double-check that all sensors are operating without issues!"
"Communication lines are normal!"
"Pressure levels are slightly high, but still within acceptable limits."
Amid the tense atmosphere, the researchers moved in perfect unison under the command of Dr. Yoon Jingu, a former NASA veteran who headed the launch vehicle division.
A single minor mistake could immediately lead to a launch failure, so everyone maintained razor-sharp focus, as if walking on thin ice.
Because this was the country's very first attempt at launching a space rocket, something never done domestically before, palms grew sweaty, and lips went dry with tension.
Standing slightly back and observing the launch preparations, Choi Tae-ho, CEO of Blue Space, and Woo Byeong-ho, the executive director who had been promoted last year, noticed Seok-won's arrival and stepped over to him.
"Welcome, Chairman."
There was unmistakable tension in Choi Tae-ho's voice.
Woo Byeong-ho, the executive director standing beside him, also looked unusually stiff, his expression rigid rather than relaxed.
With everyone already on edge, Seok-won asked in as calm a tone as possible to avoid adding unnecessary pressure.
"Is the launch preparation proceeding smoothly without any issues?"
"Yes. So far, there haven't been any problems."
Woo Byeong-ho, the executive director whose face looked worn with fatigue as if he had barely slept for days, added to the report.
"Weather conditions are optimal, and fueling with kerosene and oxidizer has been fully completed. We just finished all final checks, so as long as no unexpected variables arise, we'll be entering the automated sequence shortly."
Instead of replying, Seok-won gave a small nod and turned his gaze to the main screen, where the nation's first domestically developed space rocket was displayed.
"Even if we brought in the necessary technology and design blueprints from Russia, it's remarkable that in just a few short years you managed to complete the space center, finish our first domestic rocket, and reach the point of a launch test. You've all worked incredibly hard."
Listing out everything they had accomplished so far filled him with a renewed sense of pride.
"It's all thanks to your full and unwavering support, Chairman."
Choi Tae-ho said this with a gentle smile.
"That's right. Even the government wouldn't have been able to commit funding this boldly."
Woo Byeong-ho, the executive director, chimed in agreement beside him.
In fact, over the past three years, Seok-won had poured an enormous sum of capital into Blue Space, far exceeding the amount he had initially promised, investing a staggering total of 100 billion dollars.
"One regret is that we're using the Russian-made RD-170 rather than a domestically developed engine."
Choi Tae-ho smacked his lips softly.
"A rocket engine isn't something you can build easily, so it can't be helped. Instead, next time, we'll make sure even the engine is entirely our own and launch a rocket into space with our own hands."
"Yes. We will make that happen."
Choi Tae-ho nodded with a resolute expression.
"With the passion and skill of our researchers and engineers, I truly believe we can succeed."
Seok-won returned the sentiment with a look of firm trust.
Just then, an announcement rang out through the speakers mounted on the wall.
[Launch minus 15 minutes. We will now begin the automatic countdown.]
At that, Choi Tae-ho glanced around, tension creeping back into his expression.
"It looks like the automated sequence has started."
Woo Byeong-ho, the executive director, followed up in a voice heavy with anxiety.
"From this point on, all procedures will proceed according to the preprogrammed automatic launch system, without any human intervention."
As the white vapor billowing out grew even thicker, the countdown numbers beside the image of the towering rocket began to drop rapidly.
Seok-won swallowed a tense breath and clenched his fist tightly.
[900, 899, 898... 854]
With each passing second of the countdown, the tension mounted until it felt hard to even breathe.
Moving to a spot with a clear view of the main screen, Seok-won stood alongside Choi Tae-ho and Woo Byeong-ho, staring straight ahead with anxious eyes, silently praying for a flawless launch.