Investor That Can See The Future

Chapter 312

After a while, we held the OTK Company shareholders’ meeting.

The CEO and COO, the largest shareholder (80%) and the second-largest shareholder (17%) gathered together. Minority shareholders (3%) decided not to call because confidentiality was required.

To put it simply, it means that Taek-gyu and I are talking alone.

I brought out the agenda.

“Why should we buy Toyota stock?”

“We can work together. Just like Zhou Cha bought 10 percent of Daimler AG stock.”

“Are we with Toyota?”

The possibility of collaborating with Toyota was extremely low, unless it was known to other automakers.

After Karos unveiled the technology, competing automakers joined hands.

Japan established Auto Alliance under the leadership of the government. Toyota, Honda, Softbox, Sony, Toshiba, all related Japanese companies have come together.

The leader of this alliance was effectively Toyota.

Therefore, it was good to say that there is little chance that Karos will partner with Toyota. Even if we hold hands… … .

“If 14.97 million shares are 14.97 million yen, it is 1 yen per share. Does this make sense?”

“Toyota has gone bankrupt.”

There are often cases where a company goes bankrupt and sells for just $1. Of course, this is not a normal case, and it is usually acquired at a low price on condition that it is responsible for a huge debt.

“How many assets does Toyota have? If you add it all up, it will come out to 10 trillion yen.”

In the first place, the Japanese government cannot just watch a company as big as Toyota go bankrupt. And Japan is a country with a huge domestic market with a population of 120 million and a per capita income of $40,000.

It is impossible for domestic demand to decline to such an extent even if it is maintained to some extent.

“What if an earthquake hits and Japan sinks?”

“It sounds absurd, but even if that happens, Toyota has more overseas production bases than Japan. Even if Japan sinks, there is no way the stock price will be like that.”

Then what is it?

“A large-scale recall or something?”

“It was there last time, but it wasn’t ruined.”

“Japanese Civil War?”

“What civil war? Kanto and Kansai?”

“A meteorite impact?”

“Then do you think the Korean Peninsula will be okay?”

All kinds of hypotheses came out, but none of them could be properly explained.

As he continued to sigh in frustration, Taek-gyu said.

“Isn’t it just a mistake without thinking too much about it?”

“Are you saying that foreknowledge is wrong?”

Suddenly, his voice grew serious.

In fact, I was the first to think of that possibility. However, I didn’t say it because if it were true, all the premises would fall apart.

So far, the foreknowledge has never been wrong. What would happen must happen, and what may or may not happen is made to happen.

However, if your foresight is wrong, you can no longer rely on this alone to make investments or decisions.

Taehyung shook his head.

“No, it’s not intelligence, it’s a person. Even if Yeji doesn’t make mistakes, people can make mistakes. Isn’t it possible to mistakenly write 1 yen in the contract?”

“… … What?”

At that moment, one thing popped into my mind.

I jumped up and shouted.

“Fat Finger!”

“What are you talking about? Fat Finger? Are your fingers fat?”

“right. What would happen if I hit the keyboard with fat fingers?”

Taek-gyu answered, even though he was confused.

“Is there a typo?”

I snapped my fingers.

“That’s right.”

* * *

Fat finger.

In the financial world, it is a term that refers to an order mistake.

In finance, numbers determine everything. If it is 0, the unit of amount changes even if you take a wrong picture. Therefore, a small mistake can have catastrophic consequences.

Hearing my story, Taek-gyu blinked his eyes and said.

“So you mean that someone accidentally sold 14.97 million Toyota shares for 1 yen, and you buy them? For only 14.97 million yen?”

“right.”

This explains it correctly.

Taek-gyu groaned in disbelief.

“Does that make sense?”

surprisingly it makes sense

“It’s not the first time something similar has happened.”

In 2010, the Dow Jones Industrial Average fell nearly 10% in 15 minutes after an American brokerage employee mistyped 1 million units of transactions by 1 billion units.

In 2015, a Japanese securities company sold 630,000 shares for 1 yen by mistake because it was selling 1 share for 630,000 yen. The order was canceled, but the transaction had already taken place, resulting in a loss of 4 billion yen.

In addition to this, there are countless cases of ordering mistakes. Selling by mistake, entering the wrong unit, confusing numbers, etc.

In order to prevent such ordering mistakes, securities companies and exchanges have all kinds of safeguards in place. However, there cannot be mistakes in what people do.

If you forget, it pops out periodically once in a while.

Taek-gyu said as if he had remembered something.

“Ah! Wasn’t there a case of counterfeit stocks in Seosung Securities?”

“right.”

It happened relatively recently.

Seosung Securities mistakenly paid out 1,000 shares because it paid 1,000 won per share to 2.8 million employee shares.

Normally, 2.8 billion won was supposed to be deposited, but more than 110 trillion stocks were paid out. Even though Seosung Securities doesn’t have enough stocks. (Initially, the market cap was only 4 trillion won).

Seosung Securities immediately took over, but in the meantime, some employees happily sold it to make a profit, and the stock price plummeted more than 15 percent that day.

Fortunately, since it happened inside the company, it was possible to cancel and recover the issued stock without any major loss, but it would have been difficult to avoid bankruptcy if a foreign securities company had received it.

“Are you aware of the bankruptcy case of Hansu Securities?”

“Are you asking because you think you know?”

“No, I was just asking.”

Hansoo Securities was a mid-sized securities company with a market cap of 300 billion won.

However, an employee mistakenly entered the call option and put option interchangeably and poured out a large order. Because of the error, it was possible to make a profit of more than 100 times just by reselling immediately after buying.

This order error caused the stock market to fluctuate. At that time, relations with North Korea had deteriorated extremely, so foreign investors misunderstood this as North Korea’s military action and poured out sales, and the KOSPI and KOSDAQ plummeted in an instant.

Hansu Securities soon realized the order mistake and tried to cancel it, but the transaction had already been completed.

The amount purchased by domestic institutions was barely returned due to circumstances, but the amount purchased by foreign securities companies was not returned.

Japanese securities companies took more than 70 percent of the stock, and Hansu Securities immediately requested the Tokyo Exchange and the relevant securities company to cancel the transaction, but it was not accepted.

The CEO and shareholders of Hansoo Securities filed a lawsuit in a Japanese court.

“What was the result?”

“I went to the Supreme Court of Japan and lost.”

The final verdict came out last month.

As long as the transaction has been completed normally, there is no obligation to return it. The judgment was based on the fact that there was no clear basis for distinguishing an order mistake from a normal order, and that it was difficult to cancel a transaction in reality as stocks were traded again.

When even South Korean lawmakers protested that even if it was a court ruling, it could be morally returned, Chief Cabinet Secretary Shinji Hayashi said, “This is a shameless act. They don’t know how to be ashamed of their mistakes, they don’t know how to keep their promises, they don’t know how to obey the law. Korea should respect the judgment of the Japanese court,” he said, expressing his displeasure.

Eventually, Hansu Securities went bankrupt. Stocks were delisted, employees became unemployed, and small investors shed tears.

All of this happened because of one mistake.

Let’s think about it.

Yeji informed that OTK Company would acquire Toyota stock. This means that the transaction has actually taken place.

The same order mistake cannot happen two or three times, so it should be considered that it was made only once.

In order to sell stock, you must first own it. So, where else in the world has this much Toyota stock?

There is only one place to do nothing but search.

Right away… … .

“Japan Public Pension Fund.”

* * *

Japan Public Pension Fund (GPIF).

Like Korea’s National Pension Service, it is an institution that invests and manages Japanese people’s retirement funds.

“Currently, assets under management are 150 trillion yen.”

Taek-gyu opened his mouth.

“It’s over 1600 trillion won.”

“It’s the world’s largest.”

Although Japan is not an international financial center, there are many world-class IBs as the economy is so large.

The most famous among them is Nomura Securities. (RCK Bros Vice Chairman Shin Byung-doo also worked there).

I looked for related materials.

Pension funds are so large that they invest in assets around the world to diversify their risk. The Japan Public Pension Fund also invests in Japanese stocks, bonds, real estate and, of course, around the world.

When pension funds invest, they usually entrust them to a number of institutions through tenders.

“The stock investment of the Japan Public Pension Fund was originally run by five or six companies, including Nomura Securities, but after Prime Minister Ozakaki came to power, they started to focus on Nishida Securities.”

It is the world’s largest pension fund. The profits that can be obtained from the operation are enormous.

Thanks to this, Nishida Securities, which ranked fourth in the past years, has risen to the second place in the industry and has grown to the point of threatening Nomura Securities.

“The interesting fact is that the major shareholder of Nishida Securities is a company called Endomori.”

Japan was faster in modernization and industrial revolution than most European countries. As such, capitalists were born early, and they grew into chaebols through World War II and post-war recovery.

Taehyung nodded his head.

“Ah! Zaibatsu.”

I asked surprised.(Read more @ wuxiax.com)

“how did you know?”

Just as the Korean conglomerate is referred to as ‘Chaebol’ in foreign countries, the Japanese conglomerate is also referred to as ‘Zaibatsu’ as a proper noun.

“Sometimes, Anina appears in the novel.”

“… … .”

like that.

Anyway, Endo Group is a war crimes company that grew up in the supply of military supplies during World War II. It was later disbanded with the end of the war, but Endo Corporation, the parent company of the group, survived by changing its name to Endomori.

“Prime Minister Okazaki’s wife is Aoko Okazaki. Her original name was Aoko Musaka.”

“In Japan, when you marry, you take your husband’s last name.”

“right. And Musaka Aoko’s maternal grandfather, Endo Tetsuro, served as Endomori’s chairman. Now, Aoko’s younger brother, that is, Prime Minister Okazaki’s brother-in-law, is on the board.”

In Korea, it means that the National Pension Service has entrusted investment in domestic stocks to a securities company closely related to the First Lady’s family.

“Is there still a problem?”

“Why not?”

When this fact became known, the opposition party hardened the LDP. It is an obvious preference.

Prime Minister Okazaki explained:

‘The allegations of preferential treatment for Nishida Securities are false. In the meantime, public pension funds have been negligently managed. There were also many unreasonable practices, such as paying commission fees regardless of profit or loss and no one was responsible for the loss. Please understand that it was an inevitable measure to reduce fees and increase operational efficiency.’

At the same time, he refused to answer about the relationship between his wife and Nishida Securities.

The opposition party threatened to hold an audit and summon all those involved for a thorough investigation. As the offensive grew, Prime Minister Okazaki changed the direction of his point by shouting instead of explaining.

‘Since entrusting it to Nishida Securities, the public pension fund’s return on domestic stock investment has reached an all-time high, and people’s old-age assets have increased that much. What’s wrong with this? Then, if the rate of return falls by entrusting it to someone else, will the opposition lawmakers be held responsible?’

After Okazaki took office, the LDP revised the articles of incorporation for the purpose of stimulating investment, greatly increasing the proportion of domestic stock holdings of pension funds.

The yen is added to this, and the Nikkei index, which stayed at 10,000 units, has soared to over 20,000 now. Naturally, the yield more than doubled.

Whatever the process, there is no one who doesn’t like it when they say they made money. Japanese public opinion leaned toward supporting Prime Minister Okazaki, and the opposition party, which had been on the offensive, withdrew without even winning a battle.

The Japan Public Pension Fund concentrated on buying Toyota in the process of increasing the proportion of stock investment in Japan. Profitability improved thanks to the weak yen, and it is the largest market cap in the Nikkei.

Institutions basically aim for stable investment and prefer large-scale companies. Likewise, the Korean National Pension Service also bought the most among domestic stocks in Seosung Electronics.

It is known that the Japan Public Pension Fund holds 15.2 million shares of Toyota, which is more than 10 percent. What happens when you accidentally sell these stocks at 1 yen per share?

Even with the recent decline, Toyota’s current market cap is about 23 trillion yen.

With just one mistake, 2.3 trillion yen of Japanese people’s retirement funds will be blown away!

“And we’re going to make 25 trillion won.”

Taek-gyu opened his mouth wide in surprise.

“It’s great.”