Yes, Stevenson's group is the forerunner of Tiger Fund, who is trying to short the Korean won in preparation for the future by disguising their identities to investigate the South Korean market, including large corporations and the domestic economic situation.

In fact, in addition to the Tiger Fund, basically the well-known hedge funds on Wall Street sent analysts during this time to conduct highly intensive research on the South Korean economy. These analysts not only visited the senior management of large conglomerates, but also interacted closely with people in the Korean financial community, hoping to find out the possible support for the depreciation of the won or the shortcomings of the Korean financial system through systematic intelligence gathering and analysis, so as to use these weaknesses to find a possibility of impacting the South Korean exchange rate system.

The current exchange rate system in South Korea is a daily limited adjustment mechanism, that is, there is a limit to the exchange rate fluctuation on the next day relative to the closing price in the market on the previous day. This exchange rate system does not have a fixed target range, and is a compromise between the fixed exchange rate system and the floating exchange rate system that currently exist in the market.

For example, if the average closing price of the Korean won against the US dollar is 800:1 on one day and the fluctuation range set by the Bank of Korea is 1%, then the fluctuation range of the Korean won against the US dollar will fluctuate between 792:1 and 808:1 the next day. If the closing price of the day falls to 805 won to 1 dollar, then the price range of the won to the dollar on the next trading day will be between 796.95 and 813.05.

This exchange rate system is not free-floating, and naturally it is possible to be attacked. If the won's volatility exceeds the limits set by the Bank of Korea, South Korea is obliged to intervene. As long as the central bank intervenes. An attack on the exchange rate regime is possible.

It is precisely because the quantum fund has gone too far in Southeast Asia that the entire East Asian region is deeply wary of US hedge funds and international funds, especially when the Malaysian prime minister directly denounced Soros as an "idiot" and the acting prime minister of Thailand even announced that he would use the mafia to kill Soros.

It is precisely because of this that Billy, who has a certain reputation in the Korean financial circles. Instead of personally landing on South Korean soil, Kim Jae instead sent a few unfamiliar faces to investigate the Korean economy on the spot with the help of identity disguise. Kim is well aware of how paranoid South Korea is a nation and society. Kim's identity is revealed. He was greeted by the fear that he would never be able to set foot on the territory of South Korea again for the rest of his life.

This is definitely not alarmist. In fact, there was a singer in South Korea in later generations, who was popular for a while, and he was a household name in South Korea, and his career was as good as Japan. It was only later that he chose to become an American citizen in order to avoid South Korea's compulsory military service system. In an instant, he was ruined in South Korea. It has become the object of accusations from all sides. In the end, he could only leave all his career behind and leave the country.

Therefore, when Stevenson and others were revealed to be identities, they would have such a reaction, even in order to seal Zhong Shi's mouth. did not hesitate to offend Kim Sun-hye, and quickly settled the matter of Park Do-woo.

Originally, this incident was made up by Kim Shanxie in order to curry favor with these so-called "investors", and the middle-aged man was also slapped angrily by Kim Shanxie because of his temporary negligence in work. Stevenson and others were stunned by this scene, although they had already overestimated the paranoia of Koreans, but they never expected this scene to happen in public.

If it were in the United States, this kind of behavior would definitely happen to fight each other or even fight desperately, and you must know that the psychology of the Americans is Lao Tzu's best in the world, and he is full of aggression. However, another scene that happened later made them even more dumbfounded, and they didn't know what to do. If it weren't for Zhong Shi coming to persuade them, they wouldn't have known that all this was to please them.

Zhong Shi also accepted it when he saw it, and had a few perfunctory words with this group of people with ulterior motives, before leaving with Park Duyou, whose face was covered with blood.

……

"Ladies and gentlemen, we've been visiting Korea for a while, so now we can tell you what you think!" Two days later, in Zhong Shi's room, a small meeting was being held in secret.

When Zhong Shi asked, several traders looked at each other at first, and only after a long time did one of them speak: "According to our investigation during this period, we found that there are serious problems in the Korean financial system, which are similar to other Southeast Asian countries, that is, there is a serious bubble in the real estate market and the stock market. Since the foreign investment brought about by the rapid economic growth is not entirely used in the production industry, a considerable part of it is squeezed into the capital market, which is quite dangerous. ”

But the bubble is gradually being dismantled, and since the Kospi hit a peak of 799 in June, the stock market across South Korea has fallen more than 150 points, or 19 percent, so far. This decline is partly due to the poor economic environment in Southeast Asia as a whole, and on the other hand, it may be that the South Korean government is consciously removing the asset bubble. ”

"As a result, it has become very difficult for Korean companies to raise money from the stock market. Without this avenue of financing, South Korean companies would have to raise money from banks and foreign investors, in the form of loans and bonds, both of which would not be too costly in any case. ”

After talking about the stock market, another researcher immediately took over and continued: "According to my analysis in the past two days and the feedback from the South Korean side, there is a common phenomenon in Korean companies, that is, the debt ratio is too high. This high is not what we generally think of, but super high. ”

Generally speaking, in the process of development, it is inevitable for an enterprise to borrow money due to cash flow, expansion of production, etc. Relative to net assets, the general enterprise generally has about 30%-70% of the debt, more than 50% of the debt level will be considered a high debt ratio, and more than 100% will be considered insolvent, if this kind of enterprise is not rapid development, has a good market and prospects, investors will avoid this kind of enterprise.

However, the general debt ratio of Korean companies exceeds 100%, and some even reach a staggering 1,000%, that is, the net assets of ten such companies can pay off the debts of creditors. This level of debt, if placed elsewhere, would have long been considered one of the high-risk enterprises.

According to information from South Korea's financial industry, they estimate that the average debt ratio of Korean companies is around 400%, and the top 30 companies in South Korea are more than 500% debt. This staggering debt ratio is quite terrifying, and if a creditor recovers the debt, these companies will immediately fall into a cash flow collapse. ”

"The reason for my analysis is that after the 80s, South Korea began to expand rapidly outward, and this expansion was based on the premise of rapid export growth and based on rapid development. As a result of this growth, short-term external debt accounts for more than 50% of GDP, according to statistics, the short-term external debt of South Korea's corporate sector alone accounts for more than 50% of South Korea's GDP. Globally, such a high level of dependence on external debt is also extremely rare. ”

Hearing these analyses, Zhong Shi nodded noncommittally, and did not express his opinion, but tilted his head, not knowing what Lu Dao was thinking.

Seeing the boss's expression, the others felt a little uneasy in their hearts. After a moment of silence, an analyst continued: "In addition, there is another peculiar phenomenon, which is not only strange, but even quite dangerous and fatal for the South Korean economy. ”

"After the liberalization of the Korean economy in the 80s, structural adjustments were made. This adjustment is concentrated in the fields of automobiles, heavy machinery manufacturing, steel refining, shipbuilding, and overseas engineering. The main measure of adjustment is that the South Korean government requires large enterprises to reorganize and merge, and as a result, a large number of heavyweight consortia have been created, including the Samsung Group, Kia Group, and Daewoo Consortium, which we are more familiar with. ”

"It has to be said that the rise of these consortia has greatly strengthened the international competitiveness of Korean companies, and has also given birth to many super companies that rank high in the world. But ......"

Speaking of this, the researcher paused, looked at Zhong Shi's face, and saw that he had no special expression, so he continued: "This kind of consortium system at the cost of a high degree of monopoly seems to have strengthened its competitiveness in the world, but in turn, it has kidnapped the South Korean government and people. In other words, even in a market economy, these consortia do not have major problems in their operations, and even in order to avoid social unrest and high unemployment, the South Korean government has to help these consortia when they are in trouble, which is really ......."

At this point, the researcher lowered his head, trying to find a suitable word to explain the behavior, but it was difficult for him to find the right word in a short period of time, even if he racked his brain.

"Too big to fail

tofail) yes? Just as he was thinking hard, Zhong Shi said a word.

The researcher's eyes lit up, and he immediately nodded in agreement, "Yes, that's the word." Too big to fail, too big to fail. He repeated it several times, and found that it was too apt.

Too big to fail, this situation is very familiar to Zhong Shi. When the financial crisis broke out in the United States in the future, in order to cope with the cash flow crisis of the financial giants, the US government endured criticism from all sides and resolutely injected huge amounts of money into these financial giants to help them tide over the difficulties. This violation of the market economy has been widely criticized by the economics community, but the US government is very clear that if these financial giants are allowed to collapse, the entire financial market of the United States will collapse, and what will follow will no longer be a financial crisis caused by subprime loans, but will evolve into an economic crisis of the whole society, and even the Great Depression.

"If the South Korean side does not consider debt hedging due to the excessive external debt, the nominal external debt of these large companies will rise sharply in the event of a depreciation of the won. At that time, even the export benefits brought about by the depreciation of the won will not be able to compensate for the increase in nominal foreign debt, and because of the general depreciation of the currencies in Southeast Asia, the competitive pressure on the Korean export industry is by no means comparable to that before. ”

After saying this, the researcher shook his head helplessly, and even he himself believed that the development of Korean companies had gone astray. (To be continued......)

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