Chapter 184: Golden Edge

DJ Capital’s conference room.

Lisa and Grant still looked skeptical.

No matter how much I explained why I thought Brexit was likely.

The two of them didn’t seem convinced.

‘Well, I know because I’ve actually experienced it.’

If I were in their position, I might have thought the same thing.

Anyway, I didn’t back down from my claim that Brexit was definitely going to happen.

And the two of them had no choice but to start formulating detailed strategies based on my claim.

“If Brexit happens, it would be good to clarify more specifically which assets to take short positions on.”

I had been thinking about this on my way to New York.

“First of all, the British pound and major bank stocks will also plummet immediately after Brexit is confirmed, as will financial stocks.”

If there were concerns that London would no longer be the center of European finance.

It went without saying that financial stocks would take the biggest hit.

Lisa quickly took notes of what I said and asked a question.

“What about other European countries?”

“Stocks in core countries like Germany and France will obviously be hit too. Especially the stocks of manufacturers and exporters that do a lot of business with the EU will fall sharply.”

Grant added his thoughts.

“As you say, on the contrary, safe assets will be strong. Things like gold and US Treasuries.”

I nodded.

“I think the yen will also rise along with them. And US Treasuries were considered less attractive after the end of quantitative easing, but with the shock of Brexit, demand for safe assets will surge, and their prices are likely to soar.”

As the two of them were quickly formulating detailed strategies.

Seong-hwan opened his mouth, looking curious.

“Hyung, but if Brexit is so likely, why isn’t there any movement in the market right now?”

What should I say to this accurate point? After a moment’s thought, I slowly opened my mouth.

“Actually… according to current opinion polls, the remain and leave camps are almost neck and neck. But as I said, leave supporters often hesitate to voice their opinions, so the actual voting intentions are often not reflected.”

“So there are that many hidden votes?”

“I think so. And the moment the voting intentions of those who support Brexit explode through the vote, the market will be hit hard.”

There was a brief silence in the conference room.

A moment later, Lisa cautiously opened her mouth.

“Then what scale should we set for the short positions we build?”

“You said we currently have $43.8 billion in assets, right?”

“Of that, about $35 billion is immediately liquid.”

In our currency, it was about 40 trillion, more than enough bullets.

“And it’s all spread across 50 hedge funds?”

“Yes. Centered around the holding company Trinity Holdings, each hedge fund is operated with different investment strategies and targets.”

It was exactly as I intended.

“First, put $25 billion, which is 70% of the $35 billion, into short positions.”

Lisa and Grant expressed concern at the larger-than-expected scale.

“If, by any chance, Brexit is canceled, we will suffer astronomical losses.”

“I admit you have a keen eye for the market, but that seems too risky.”

The air in the conference room suddenly became heavy.

“It’s $25 billion. If we fail, most of the 50 hedge funds may have to close.”

The two of them continued to worry, but I remained firm.

The reason I came all this way, even though I was busy, was not to avoid risk.

It was to make a big profit with bold investments.

And to replenish some of the lacking liquidity in the process.

I met eyes with the two of them.

“I know you’re concerned, but what I’ve felt in the market so far is that sometimes you have to move boldly when everyone says no.”

And above all, I was sure… no, I knew Brexit would pass.

I put a little more force into my voice.

“I’ll take full responsibility. So you two just focus on the strategy, assuming Brexit will pass.”

“Hyung, are you really sure Brexit will pass?”

I nodded again at Seong-hwan’s worried question.

“Have I ever failed when I said something would happen?”

As far as I remember, never.

Seong-hwan, as well as Lisa and Grant, knew this well.

So all three of them no longer opposed what I said.

“Understood. Since you’re so sure, we’ll follow.”

“I’ll do my best to formulate a strategy in line with what you’ve said.”

After nodding once, I immediately gave specific instructions.

“First, allocate 30% of the total funds to short positions on the pound, 20% to shorts on major UK financial companies and the FTSE 100 index, and 20% to short positions on major German and French exporters.”

Grant added his opinion.

“For the remaining funds, should we allocate 20% to gold and US Treasuries and about 10% to long positions on the yen?”

“Do that, and delay the entry point as close to the vote as possible.”

“Understood.”

Lisa and Grant, who had nodded, immediately jumped up from their seats.

It was to formulate detailed strategies based on what I had said.

When only the two of us were left in the conference room, Seong-hwan opened his mouth again.

“Hyung, then the financial markets will be bad for a while, right?”

“What do you mean?”

“Well, if the UK leaves the European Union, the impact will be huge, right? So obviously, the financial markets will be in a state of shock and fear for a while.”

Seong-hwan seemed to think that if Brexit became a reality, the market would be so badly hit that it would be hard to recover.

But that was just the thought of someone who didn’t know this market well.

I continued, looking at Seong-hwan.

“Do you remember what happened to the market during the global financial crisis?”

“Of course I do. The financial markets were devastated by the subprime mortgage fallout.”

I nodded and smiled.

“Then do you know how the global financial system changed after that?”

“…?”

Seong-hwan didn’t seem to fully understand what I was saying.

I added an explanation.

“After the financial crisis, central banks around the world put in place various safety measures to prepare for a crisis. The impact of the global financial crisis was too shocking for them.”

“Safety measures?”

“Yes, especially to prepare for the market being shaken by such political events, I’m sure central banks around the world have stockpiled guns and bazookas by now?”

Seong-hwan still looked confused.

“What do you mean, guns and bazookas?”

“I mean, they’re prepared for the possibility of Brexit. If Brexit becomes a reality, they’re ready to immediately deploy emergency measures like currency swaps and liquidity support.”

In fact, during the last global financial crisis, the Fed effectively left Lehman Brothers to fend for itself, and the impact spread around the world in an instant.

To quell the financial crisis, they had to implement a massive $4.5 trillion quantitative easing program.

It was literally a case of using a shovel when a hoe would have sufficed.

‘Unless they’re fools, they won’t make the same mistake twice.’

“So what you’re saying is, even if Brexit actually happens, the market shock won’t last long?”

“Yes. If the Brexit vote passes, the market will be volatile at first, but soon central banks around the world will provide massive liquidity, and it will rebound in a ‘V’ shape.”

One of the systems that central banks around the world put in place after the global financial crisis was.

Currency swap agreements to exchange each other’s currencies.

Seong-hwan’s expression, having heard this much, showed relief.

“I thought you were betting on the market completely collapsing. But that’s not it.”

“Of course not, the strategy I’ve taken is to feast on both longs and shorts.”

＊＊＊

June 23, 2016.

Even though it was early in the morning, the DJ Capital trading room was filled with excitement.

A referendum was underway in the distant UK.

It was a day when the two words ‘Brexit’ would shake the global economy to its core.

“The market is stable even after the London open.”

Lisa cautiously reported the situation.

Glancing at the screen, as Lisa said, the FTSE index had risen slightly on expectations of a remain vote, and the pound was also rebounding.

Most media outlets, including the BBC, Reuters, and The Guardian, were predicting a “remain victory,” and the market was subtly relieved.

“It’s not going to end up as a remain vote, is it?”

Seong-hwan scanned the articles with a worried expression.

If, by any chance, Brexit didn’t pass.

We would suffer astronomical losses due to our highly aggressive investments.

But to my eyes, these movements seemed rather abnormal.

It was like a giant trap luring in tasty prey.

‘It must be my imagination.’

Shaking my head to clear my thoughts, I turned my gaze to the TV in the corner of the trading room.

The Brexit vote count was being broadcast live.

.

.

.

Not far from Lower Manhattan and Midtown.

The city lights reflected off the golden glass exterior.

Golden Edge, the ultra-giant financial company called the symbol of Wall Street in New York.

With an unofficial statistic that they controlled more than 12% of the global financial market, they moved beyond a simple investment company, like a ‘shadow government.’

Ultra-precision strategy room.

Codename Vault-3.

As the real-time Brexit vote count appeared on the projector.

A suited man opened his mouth with a cold expression.

“Boss, the Sunderland count in London is in.”

[Leave 61.3%]

It was going as expected.

The woman sitting next to him continued her report.

“The market is reacting immediately. Pound plummeting, European indices falling in tandem. We’re seeing a 17.4% return across the short positions we’ve built.”

A man sitting at the end of the conference room slowly opened his eyes.

His long blond hair swept back.

Wearing a black suit and a deep purple tie.

Lionel Brennan.

Golden Edge’s Chief Investment Strategist and the architect of this massive operation.

“We’ve been preparing for three years, so we need to maximize our profits.”

Thanks to coordinating with the UK government, the result was certain.

And market manipulation proxies were all in place beforehand.

Lionel smiled with satisfaction as he scanned the numbers on the screen.

“Everything is going exactly as we intended.”

But then.

A man cautiously spoke up.

“Boss, there’s something strange.”

“…?”

“Just before the London vote was finalized, a fund entered a position at almost the same time as us.”