The time had come to brief the entire Board of Directors on the covert operations in Southeast Asia, specifically in Thailand, and to outline the concrete action plan for the near future.
Over the past two years, under Takuya Nakayama's direction, the Sega Investment Department had discreetly funneled a massive amount of capital into the Southeast Asian market, breaking the funds down into smaller, less conspicuous tranches.
At the time, the region's economy was white-hot, a veritable firestorm of growth. The real estate and stock markets were skyrocketing in tandem; one could make a fortune just by closing their eyes and picking up the money.
The Investment Department had followed the established plan, pouring capital into the market and snowballing their gains along with the local frenzy.
However, once the expectation of an inevitable regional financial crisis was solidified, Director Hoshino immediately and decisively began closing their positions. They worked swiftly to liquidate assets that had reached their peak short-term appreciation, quietly converting them back into liquid funds.
It could be said that Sega had already devoured the sweetest and most lucrative portion of the economic bubble that had inflated across Southeast Asia.
"Everyone, please look at the latest data from the Bank for International Settlements." Director Hoshino handed a photocopy to the assistant beside him, gesturing for her to distribute it. "Starting from the fourth quarter of this year, the volume of hot money flowing into Southeast Asia has plummeted."
"Foreign capital is no longer coming in. Although they haven't started a large-scale withdrawal yet, the faucet has been screwed shut."
Changes in capital flows were always the most direct and lethal signals.
"We need to complete a full withdrawal of our initial investments by the fourth quarter," Director Hoshino said, rapping his knuckles heavily on the table, his tone resolute. "We won't aim for the absolute peak. Securing our profits is the top priority. From now on, we will focus all our energy on screening short-selling targets and preparing the toolchain."
The conference room fell silent, so quiet that even the sound of breathing seemed muted.
The directors present listened with rapt attention, some even taking out small notebooks to jot down notes.
Ever since the Board of Directors approved the Southeast Asian trading plan, these old men's attitude toward the Investment Department had done a complete 180-degree turn.
In their eyes, the Investment Department had previously been nothing more than a wealth management agency. As long as it could beat inflation and ensure the group's cash on the books didn't depreciate, they considered it a blessing.
Whenever other business departments were desperate for cash, they never bothered to consider Director Hoshino's feelings when siphoning funds from the Investment Department. In fact, they considered it their right.
It wasn't until the late 1980s, when the department rode the Japanese asset bubble to its peak and then executed a flawless exit and a massive short-sell as it burst, that things changed. Those two god-tier maneuvers had raked in a colossal fortune against the tide, finally allowing the Investment Department to stand tall and demand respect within the Board of Directors.
Now, Director Hoshino was orchestrating a financial gambit that could propel Sega to a quantum leap in development. The sheer sense of accomplishment from controlling such vast sums of money and manipulating the global market gave him an aura of unstoppable competence.
"Let's start with the target assessment." Director Hoshino stood up, walked to the whiteboard, grabbed a marker, and swiftly listed the names of several countries.
"Our primary target is Thailand. Its current account deficit is 8% of its GDP, and its short-term external debt is 1.3 times its foreign exchange reserves. It has the weakest foundation and the biggest bubble—just one small prick and it will burst. Next are Malaysia, Indonesia, and the Philippines. These four will be our main focus moving forward."
He paused, turned around, and added one last name to the bottom of the whiteboard, surprising everyone.
"South Korea."
Director Sugiura looked up at the whiteboard, his brow furrowing slightly. "South Korea is much larger than those Southeast Asian countries. They have a real manufacturing sector supporting them—it's not all a bubble. Will they really run into trouble?"
"The real estate bubble, combined with the chaebols' unrestrained foreign borrowing, has already planted the seeds of disaster," Director Hoshino explained with a cold smile. "The won seems resilient for now, but once the Southeast Asian line of defense collapses, panic will spread like a plague. South Korea's fragile financial system won't stand a chance against the onslaught of international speculative capital."
Takuya Nakayama, seated in the main chair, leaned back in his seat, casually twirling a Montblanc fountain pen in his hand.
"The targets are set," he said with a smile, throwing out the bait. "How exactly do we strike?"
Director Hoshino turned to the next page of his memo, his gaze sharpening as he began to break down the specific operational tools.
"The first tool: Non-Deliverable Forwards, or NDFs. We will short the baht in the offshore market, avoiding their onshore controls entirely. This allows us to leverage our positions to the extreme, while remaining flexible enough to exit at any moment."
"The second prong: borrow Baht in the spot market and sell it immediately. This will coordinate with our offshore operations to put real pressure on the spot exchange rate."
"Third, short positions on the Stock Exchange of Thailand's index futures. Once the currency crashes, the stock market will inevitably collapse with it—no one will be able to save it. This is the secondary gain from our multi-dimensional attack."
"Fourth, Credit Default Swaps and the non-performing asset channels of banks. We'll bet directly on the bankruptcy of their domestic financial institutions."
Director Hoshino laid out the four lethal strategies in one breath. He picked up his glass, took a sip of water to clear his throat, and then added with a glint in his eyes, "And there are the Hang Seng Index Futures. If the storm sweeps into Hong Kong after next October, we can wait to see how things unfold before following up. This will be our second wave of potential profits."
As the chain of financial weapons was fully revealed, a few sharp intakes of breath echoed through the conference room, followed by low-voiced murmurs.
This combination of strikes was designed to devour them whole, skin and bone.
Director Hattori took off his reading glasses and began to wipe them slowly with a microfiber cloth, his movements deliberate and gentle.
"It sounds airtight. A perfect trap," Director Hattori said slowly, then raised a question. "If we have all the tools ready, why not strike now? Wouldn't it be cheaper to set the stage earlier?"
Director Hoshino shook his head decisively.
"We absolutely cannot rush into placing orders," he explained patiently. "The core logic of our strategy is risk and cost control. In the fourth quarter of this year, the Baht's exchange rate is still pegged at twenty-five to one. The Bank of Thailand is still stubbornly defending that peg. If we build a large-scale short position now, the annual cost of borrowing Baht will be as high as twelve to fifteen percent. Paying that interest for half a year would eat up all our profit margins. We'd be working for the banks for free."
He pressed both hands onto the table, leaned forward, and looked around at everyone, his tone grave.
"Even worse, if we enter the market too early and expose our target before the Wall Street hedge funds join in, Sega will be a sitting duck, fighting alone when the Bank of Thailand retaliates. We have money, yes, but not enough to take on a nation's foreign exchange reserves single-handedly."
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