"Did you say the baht?"
When Rodney furrowed his brows and looked at him, George Hamilton gave a slight nod and leisurely picked up the glass of whiskey on the rocks in front of him.
"To be more precise, the Thai economic situation."
"...!"
Realizing what he meant, Rodney straightened his posture with a serious expression.
"Have you chosen Thailand as the first target?"
George Hamilton took a sip of whiskey and, speaking a bit slowly, replied:
"The size of the financial market is large, and more importantly, compared to other Asian countries, it's much more open. It's easy to put money in and pull it out. Perfect for the first round of 'shearing the sheep.'"
Rodney thought for a moment before leaning forward in his seat.
"That sounds like a good idea. Thailand, which had been enjoying rapid growth at over 8% annually, recently revised its economic growth rate down to 6.7% this year—so the timing is perfect."
"Exactly. The Thai government and the public, not realizing the warning signs flashing red, think it's just a short breather after years of a hot economy."
Rodney shrugged with a cynical look.
"They're so intoxicated by the abundance of flowing dollars that they're completely blind to the possibility of an approaching crisis."
"Right. That's why, even though demand has already been exceeded and the market is saturated, they keep recklessly taking out dollar loans and building high-rise buildings and luxury mansions all over Bangkok."
With domestic interest rates in Thailand at 18%, but dollar and yen loans at only 6–8%, both corporations and individuals had borrowed foreign currency to start businesses or buy real estate.
As asset values rose, people borrowed even more money to buy more real estate or stocks, repeating the cycle and inflating the bubble to an unsustainable size.
"According to the data, the ratio of non-performing loans at Thai financial institutions has started to surge rapidly since the beginning of this year."
"It's already exceeded 7%, and there's a high possibility it will reach 10% by the end of the year."
After hearing about the potential for a financial crisis from George Hamilton, Rodney and Quantum Fund had been closely monitoring the economic situations of Asian countries.
"That means some investors will start to sense the risk and begin pulling their money out soon."
"Citibank and Société Générale are already showing such signs."
Société Générale, established in 1864, was not only one of the oldest banks in France but also one of the largest in Europe.
"It's only a matter of time before other foreign investors catch on."
"They'll try to stay quiet until they've fully withdrawn their investments, but since the sums involved are large, the rumors will spread quickly."
"Everyone's got a nose for money, after all."
As George Hamilton set down his glass, the clink of ice echoed.
"When do you think the possibility of the baht collapsing will begin to surface?"
Rodney, having already considered this, responded without hesitation:
"By early next year at the latest, the sense of crisis will start spreading in the market."
George Hamilton nodded in agreement, seemingly thinking along the same lines.
Seeing this, Rodney cautiously offered a suggestion.
"If we move in too early, we might get burned. Why not start short-selling the baht once the signs of a currency crisis begin to emerge?"
George Hamilton crossed his arms and let out a thoughtful hum.
"Thailand has about $38 billion in foreign exchange reserves, right?"
"Correct."
By today's standards, this would seem like an insufficient reserve for the size of Thailand's economy, but since Asian countries hadn't yet experienced a rapid capital outflow-driven financial crisis, most had similar levels of reserves.
South Korea was no exception.
George Hamilton rubbed his smoothly shaved chin for a moment in contemplation.
Then, seemingly having made up his mind, he looked up at Rodney and said:
"Let's wait a little longer. Once the Thai economy clearly starts to decline, we'll begin dumping the baht in earnest."
Rodney looked puzzled by the unexpected response.
"Won't that be too late?"
"No. Even if the bubble is about to burst, we're going up against an entire nation—it's important to be cautious."
Leaning back, George Hamilton continued in a calm voice.
"Once the attack starts, Thailand will mobilize all its foreign reserves and its government and central bank will go all out in defense. If we move in too early, we might exhaust our strength and let someone else walk away with the prize."
Understanding Hamilton's strategy immediately, Rodney grinned.
"You mean, we should let the Thai government wear itself out fighting the other hedge funds, and then we swoop in and finish the job."
"Exactly. The best returns come when the opponent has lost their will and fallen into panic."
Rodney quickly ran mental calculations to estimate the timing.
"Assuming the crisis begins to surface early next year, we should launch our full-scale attack about a month or two after that."
George Hamilton nodded in agreement.
"That seems like the right move."
Rodney, hands on his knees and leaning slightly forward, asked with barely contained eagerness:
"How much capital should we prepare for the baht attack?"
"We don't know how long they'll hold out. And once Thailand falls, we'll need to start shearing the neighboring countries like Indonesia right away. So, secure as much capital as you possibly can."
"Understood."
Rodney smiled faintly.
"I'm already looking forward to the big game next year."
He then looked across the table at George Hamilton with newfound admiration.
"To orchestrate such a large-scale gamble—not against one country, but all of Asia… Only you could pull something like this off, Mr. Hamilton."
George Hamilton responded to Rodney's respectful gaze with a faint smile and then took a long drink of whiskey.
[Gunwoo Construction Faces Final Default Risk]
Gunwoo General Construction, a subsidiary of Gunwoo Corp., is on the brink of final default.
On the 5th, the company failed to cover a promissory note of 2.5 billion won, resulting in its first default. Today, it failed to pay another 900 million won note returned by Wuyoung Bank's Yeouido branch—its third instance of first default.
Even if this latest issue is resolved, having failed to honor a note three times means just one more failure will lead to final default.
Currently, all 22 construction sites nationwide, including a 386-unit apartment project in Sincheon 3-dong, Dong-gu, Daegu, have been halted. The Housing Project Guarantee Association is reportedly on the hook for over 600 billion won in guarantees.
Meanwhile...
Staring at the front-page article about Gunwoo General Construction's looming bankruptcy, Seok-won let out a low sigh with a hardened expression.
"If even the 26th largest construction firm is about to go under, this will be a major blow."
They were still making desperate efforts to survive, but with over 69 billion won in losses last year and cash reserves depleted, the chances of recovery were slim.
"That makes eight major construction firms that have collapsed this year alone."
In fact, this crisis in the construction industry was somewhat expected.
Construction companies had greatly expanded their operations after reaping massive profits from large-scale new town developments under the previous administration.
"But spring doesn't last forever."
As the government imposed real-name property ownership laws to curb speculation, and with the completion of new apartment developments, the housing supply rate rose sharply, cooling the real estate market almost instantly.
The result: a wave of unsold properties, blocked cash flows, and a domino of bankruptcies among construction firms.
"Last year alone, 145 construction companies went under. And now, in just the first half of this year, over 100 more? There's no clearer signal of crisis than this."
While the construction industry is known for its cycles, the sheer number of bankruptcies and the collapse of top-tier firms were like the canary in the coal mine—early signs of a financial crisis.
Tapping his desk lightly with a fingertip as he organized his thoughts, Seok-won then reached out and pressed the intercom button.
"Call CFO Um and have him come to my office immediately."
[Understood, sir.]
Leaning back in his chair, Seok-won murmured to himself.
"It might be a bit early, but it's time to start preparing."
A moment later, the door opened with a knock, and CFO Um Tae-joon entered wearing a maroon tie.
"You called for me, sir?"
Approaching the desk, he bowed slightly.
"How much retained cash do we have right now?"
Getting straight to the point, Seok-won asked.
Though slightly puzzled, Um replied calmly without hesitation.
"Excluding funds currently invested by the asset management team, we have about 79 billion won in liquid assets ready for immediate use."
"That's quite a bit more than when I first arrived."
"That's because we didn't touch the cash you injected during your last capital infusion. Also, under your instruction, we liquidated a large portion of our investment portfolio, which increased our cash reserves."
Seok-won nodded and asked again:
"What's the current USD-KRW exchange rate?"
"Due to continued export sluggishness, the rate has climbed. As of this morning, it's trading at 826 won to the dollar."
A dollar costing less than 1,000 won seemed cheap—but considering it was 772 won at the end of last year, it had already risen significantly.
'Still, if the IMF crisis hits, the rate could jump to nearly 2,000 won overnight. So, it's still cheap.'
Pushing aside that brief thought, Seok-won clasped his hands on the desk and said:
"Convert all our cash reserves into U.S. dollars."
Um Tae-joon's eyes widened in surprise.
"All of it, sir?"
"Yes."
He looked dumbfounded by the sudden order.
"Why do you want to convert all of it now?"
"I'll explain later. For now, just do it."
Unable to hide his confusion, Um hesitated but said nothing more as he noticed the firm look on Seok-won's face.
"Even if we are converting, wouldn't it be better to wait for the dollar to drop a bit?"
"No. If anything, it's going to rise even more—it won't go down."
Seok-won replied with conviction.
"Excuse me?"
Still unconvinced, Um looked puzzled. But Seok-won ignored him and added:
"So, make the conversion now—before it goes over 900 won."
"...!"
That meant he believed the rate would soon cross 900 won.
Faced with Seok-won's certainty, Um raised his eyebrows, quietly thinking that it sounded unbelievable.
A Few Days Later
A large Mercedes-Benz sedan carrying Seok-won slid smoothly to a stop in front of the gate of the main house in Hannam-dong.
Assistant Manager Han Ji-seong, who got out first, opened the car door, and Seok-won extended his long legs and stepped out from the back seat.
It was now mid-August, a time when the heat should have begun to ease, but the record-breaking heatwave made it so sweltering that simply standing still caused sweat to trickle down.
As Seok-won began walking, Assistant Manager Han quickly ran ahead and pressed the doorbell on the gatepost, announcing:
"The young boss is here."
With a beep, the metal gate's lock released.
Entering through the tall walls, Seok-won, accompanied by Han Ji-seong, walked across the well-kept garden toward the main building. Just then, a meowing sound came from the bushes, and a family of calico cats emerged.
Though it had been weeks since he last saw them, Pony and the kittens raised their tails high and brushed affectionately against his legs, greeting him as if they had missed him.
Seeing this, Seok-won smiled and bent down to pet them.
"Look at you guys. Your fur is so glossy. You must be getting plenty of good food."
At that moment, the only male in the bunch, the mackerel tabby Makdungi, lightly pawed at his leg as if asking if he had brought anything tasty.
"Ah, I forgot to bring something today. But I'll bring you a bunch of Churu next time."
"Meow."
Makdungi looked up at him and meowed, as if to say he understood.
"You little guy… Do you actually understand me?"
"Meow."
The way the cat responded so naturally made Seok-won chuckle.
After playing with the cat family for a bit, Seok-won moved on and entered the main house.
"You're here?"
Madam Jo Deok-rye, wearing a house dress, came out to the entrance to warmly greet her son whom she hadn't seen in a while.
"Welcome, sir."
Next to her, the housekeeper from Gunsan bowed politely with a smile.
"Madam Jo, you seem to have gotten even younger since I last saw you."
"What are you talking about?"
Madam Jo shook her head at Seok-won's smooth flattery, her expression showing disbelief.
"Your cheekiness just keeps growing."
Still, it was clear she wasn't displeased, which made Seok-won laugh.
"Hahaha. Have you been well?"
"How well do you think I've been? I only have two children, and both are living away from home—it gets lonely."
"Then should I move back in?"
Madam Jo rolled her eyes and waved him inside.
"Don't say things you don't mean. Go on in. Your father and your brother are in the study. Go say hello first."
"Okay."
Seok-won took off his shoes and headed to the study alone.
After a light knock, he opened the wooden door and found Chairman Park Tae-hong dressed casually, sitting on a leather sofa with his eldest son, Park Jin-hyung, the president of Daeheung Textiles.
Seated at the center, Chairman Park gestured for Seok-won to come in.
"Come on in."
"I tried to come quickly, but I guess I'm the last to arrive."
Seok-won sat down on the vacant sofa to the right, apologizing.
"How can the one who called the meeting be the last to show up?"
"I said I'm sorry."
President Park Jin-hyung playfully scolded him, and Seok-won responded with a smile.
Unlike many other chaebol families with succession disputes, the two brothers got along well. Seeing this, Chairman Park smiled faintly before shifting his expression and speaking.
"Did you hear that Chairman Woo has put Donghae Medical up for sale?"
Donghae Medical was a disposable medical supplies manufacturer—one of the subsidiaries that Chairman Woo Yong-gap had been nurturing as a future growth engine alongside finance.
Already aware of the sale through Lee Cheol-gyun, Seok-won calmly replied:
"It's probably the cost of pushing a hostile M&A too aggressively."
"Exactly. He got greedy for someone else's company and now has to sell off his own. That's karma. I felt ten years of frustration lift when I heard the news from Chief Gil."
Chairman Park answered with satisfaction.
The grudge he bore toward Chairman Woo and the Donghae Group had built up over time. It made sense—after all, they had once tried to take over the group that his own father had founded.
President Park Jin-hyung added in agreement:
"Donghae Mutual Credit Union and Donghae Peregrine Securities, which issued the illegal loans, are also likely to face heavy penalties once the FSC's investigation concludes."
"Hmph. They should."
Rumors were even circulating that Donghae Peregrine Securities might end its joint venture with Peregrine Securities in Hong Kong.
"Since Donghae had to hand over their cherished Seocho headquarters land because of the bonds Peregrine transferred to me… They must be furious. I doubt the partnership can continue."
One possible reason for selling Donghae Medical could be to raise funds to buy back shares held by Peregrine Securities in Hong Kong.
Chairman Park took a sip of coffee and turned to his eldest son.
"By the way, I heard Shenyang's local government offered additional tax breaks if we resume Phase 2 construction at Factory 2, which has been stalled due to growth stagnation?"
"Yes. They said they'd exempt all taxes on materials and machinery for the factory, not just the existing 50%."
"Then we could save several million dollars in construction costs, couldn't we?"
"Yes. It seems the central Chinese government is encouraging such benefits since regional leaders are judged heavily on economic growth rates."
"Since the Mido Department Store situation has settled, we were thinking of restarting construction soon anyway. With extra benefits, doing it a bit early doesn't sound bad. What do you think?"
"I agree."
At that moment, Seok-won suddenly interjected:
"I think we need to reconsider that."
Given that Seok-won usually avoided interfering with Daeheung Textiles, which was managed by his older brother, both Chairman Park and President Park Jin-hyung were surprised.
"What do you mean?"
They both looked at him curiously.
Realizing this connected with what he'd come to discuss today, Seok-won began speaking seriously.
"Although we won against Donghae Group, we also stretched our resources thin to block the hostile M&A. I think now's the time to tighten spending and focus on internal stability."
"Hmm. I see where you're going with this," Chairman Park replied, leaning back.
"But business is all about timing. We'll have to finish Phase 2 eventually—might as well restart it when the local government's offering benefits."
President Park nodded in agreement.
"And Liaoning, which is farther north than North Korea, gets extremely cold in winter. If we don't restart now, we might have to wait until next spring at the earliest. That'll only drive up costs."
From their expressions, it was clear they had already made up their minds.
"But since we used up most of our spare funds to defend management control, how will you cover the construction costs with so little cash left in the company?"
"We have yarn export payments coming in later this year. If we use those as collateral, we can get export loans to cover the cost."
Hearing that they even had a financing plan, Seok-won leaned forward.
"If you're in a situation where you need to use export dollars, then even more reason not to restart construction."
Chairman Park, sensing something was off, asked seriously:
"Explain why not, clearly."
Even President Park furrowed his brow and looked at him.
Facing their stares, Seok-won calmly continued.
"You've probably heard that the Bank of Korea announced a $11.66 billion current account deficit in the first half of the year."
"…"
"That's a 79.4% increase from last year's $6.5 billion. Plus, DRAM prices have fallen from $15–17 per chip early this year to just $2–3. So the deficit will only worsen."
He continued:
"Exports are slowing rapidly. Meanwhile, raw material and machinery imports have increased compared to last year—widening the trade deficit."
Though the global economy was shifting rapidly, many domestic companies were naively optimistic, assuming past export success would continue.
"Even if exports recover, Japan's yen devaluation under the reverse Plaza Accord is making their products more price-competitive. That'll make it harder for us to regain export momentum."
"If that happens, companies burdened with excess debt and inventory from over-investment will suffer, worsening the already sluggish economy."
Chairman Park and President Park's expressions hardened.
A domestic downturn would naturally lead to plummeting sales at Mido Department Store—the group's cash cow.
"And there's one more risk that could hit not just Korea, but all export-driven Asian economies."
"What is it?"
"From March the year after next, Japanese banks will be required to raise their BIS capital adequacy ratio to 10%."
The BIS ratio refers to the minimum capital banks must hold to cover risks.
"Why is that a problem?"
President Park looked puzzled.
"After the bubble burst, Japan's low interest rates caused a flood of yen to flow out into foreign markets."
"Yes."
"That's when yen carry trades emerged—borrowing cheap yen to invest in high-growth emerging markets. I'm sure you're familiar."
Massive yen flows helped inflate bubbles in many Asian economies.
"But now, with Japanese banks needing to raise their capital ratios to 10%, what do you think they'll do?"
"Hmm…"
President Park frowned, now understanding.
"They'll try to recall their loans all at once."
"Exactly. No one knows the exact amount, but Korea must have received a substantial portion of that carry trade. Even if just a third suddenly gets pulled out, domestic liquidity will dry up fast."
Chairman Park's expression turned grim.
But Seok-won wasn't done.
"If we factor in the current account deficit—where more dollars are flowing out than coming in—Korea might even face a currency crisis."
The two men widened their eyes in shock and stared at him.