An Investor Who Sees The Future Chapter 311

After a while, we held an OTK Company shareholders’ eting.

The CEO, COO, the largest shareholder (80 percent), and the second-largest shareholder (17 percent) gathered in one place. Due to the need for confidentiality, we decided not to invite the minority shareholder (3 percent).

Simply put, it ant just Taekgyu and I were talking.

I brought up the agenda item.

“Why should we buy Toyota stock?”

“We could cooperate, couldn’t we? Like how Zhou Auto bought 10 percent of Daimler AG’s stock.”

“Us, with Toyota?”

Maybe with other car companies, but the possibility of cooperating with Toyota was extrely low.

After Karos revealed its technology, competing car companies joined hands.

Japan, led by the governnt, established the Auto Alliance. Related Japanese companies, including Toyota, Honda, Softbox, Sony, and Toshiba, united as one.

The leader of this alliance was effectively Toyota.

Therefore, it was safe to assu the chances of Karos partnering with Toyota were almost nil. Even if they did…

“14.97 million shares for 14.97 million yen ans 1 yen per share. Does that even make sense?”

“Maybe Toyota went bankrupt.”

There are occasional cases where bankrupt companies are sold for a re dollar. Of course, this isn’t normal; it usually involves acquiring the company for a pittance on the condition of taking responsibility for massive debts.

“But think about Toyota’s assets. Just adding those up would likely exceed 10 trillion yen.”

In the first place, the Japanese governnt wouldn’t just stand by and watch a company like Toyota collapse. Plus, Japan is a country with a population of 120 million and a huge dostic market with a per capita inco of $40,000.

It’s impossible for them to fall that far just by maintaining their dostic market to so extent.

“What if a massive earthquake happens and Japan sinks?”

“That’s absurd, but even if sothing like that happened, Toyota has more production bases overseas than in Japan. Even if Japan sank, the stock price wouldn’t plumt like that.”

Then what could it be?

“A massive recall crisis?”

“They had one before and didn’t go bankrupt.”

“Japanese civil war?”

“What civil war? Between Kanto and Kansai?”

“An asteroid impact?”

“And you think the Korean peninsula would be fine?”

All sorts of hypotheses erged, but none adequately explained it.

As I kept sighing in frustration, Taekgyu said,

“Instead of overthinking it, isn’t it just a mistake?”

“Are you saying oracle’s prediction is wrong?”

My voice automatically turned serious.

Actually, I had thought of that possibility first. The reason I didn’t ntion it was that if it were true, our entire premise would collapse.

Until now, oracle’s predictions have never been wrong. Things predicted to happen always happened, and things that might or might not happen, we made happen.

If, by so chance, oracle was wrong, we could no longer rely solely on this for investnts or decisions.

Taekgyu shook his head.

“No, not oracle, but a person. oracle might not make mistakes, but people can, right? Couldn’t soone mistakenly write 1 yen on a contract?”

“……What?”

At that mont, sothing clicked in my mind.

I shot up and exclaid.

“Fat finger!”

“What are you talking about? Fat finger? Like, chubby fingers?”

“Exactly. What happens when you type on a keyboard with fat fingers?”

Taekgyu, though confused, answered,

“Typos?”

I snapped my fingers.

“That’s it.”

***

Fat finger.

In the financial industry, it’s a term for order entry errors.

Finance is all about numbers. Mistyping just one zero changes the monetary unit. That’s why small mistakes can lead to fatal consequences.

After hearing my explanation, Taekgyu blinked and said,

“So, you’re saying soone accidentally sells 14.97 million shares of Toyota stock for 1 yen each, and you buy them? For just 14.97 million yen?”

“Exactly.”

This explains it perfectly.

Taekgyu exclaid incredulously,

“Does that even make sense?”

Surprisingly, it does.

“Similar things have happened more than once.”

In 2010, an employee at a US brokerage firm mistakenly entered a billion-unit trade instead of a million-unit one, causing the Dow Jones index to drop nearly 10 percent in 15 minutes.

In 2015, a Japanese brokerage firm mistakenly offered to sell 630,000 shares for 1 yen each, instead of 1 share for 630,000 yen. They canceled the order, but the trade had already gone through, resulting in a loss of 4 billion yen.

Besides these, there are countless other cases of order errors: accidentally selling instead of buying, inputting the wrong unit, mixing up numbers, etc.

Brokerages and exchanges have all sorts of safety asures to prevent these order errors. But where humans are involved, mistakes are bound to happen.

They occur periodically, just when you think you’ve forgotten about them.

Taekgyu seed to recall sothing and said,

“Ah! Wasn’t there the Seosung Securities erroneously issued stock incident too?”

“Right.”

That happened relatively recently.

Seosung Securities intended to pay a dividend of 1,000 won per share for 2.8 million employee-owned shares. Instead, they mistakenly issued 1,000 shares per share.

Instead of 2.8 billion won being deposited, stocks worth over 110 trillion won were distributed. This happened even though Seosung Securities didn’t have that many shares (its total market cap was only 4 trillion won).

Seosung imdiately tried to recall them, but so employees quickly sold off their shares for profit, causing the stock price to plumt over 15% that day.

Fortunately, since it was an internal matter, they could cancel and recover the issued shares without massive losses. However, if a foreign brokerage had received them, bankruptcy would have been hard to avoid.

“Do you know about the Hansu Securities bankruptcy case?”

“Are you asking because you think I would?”

“No, just asking.”

Hansu Securities was a mid-sized brokerage with a market cap of 300 billion won.

However, an employee mistakenly swapped call and put options, flooding the market with massive orders. The error created a situation where one could make over 100 tis profit just by buying and imdiately reselling.

This order error caused market turmoil. At the ti, relations with North Korea were extrely tense, so foreign investors misinterpreted this as North Korea starting military action and rushed to sell off, causing the KOSPI and KOSDAQ to plumt instantly.

Hansu Securities soon realized the order error and tried to cancel it, but the trades were already completed.

They managed to get back the shares bought by dostic institutions after much pleading, but they couldn’t recover the shares bought by foreign brokerages.

Over 70 percent of these shares were acquired by Japanese brokerages. Hansu imdiately requested the Tokyo Stock Exchange and the relevant brokerages to cancel the trades, but their requests were denied.

Hansu Securities’ representatives and shareholders filed a lawsuit in a Japanese court.

“What was the result?”

“They lost, even after going all the way to the Japanese Supre Court.”

The final ruling ca out last month.

The reasoning was that since the trade was completed normally, there was no obligation to return the shares. The order error was entirely the responsibility of the party involved, there was no clear basis to distinguish an erroneous order from a normal one, and realistically, canceling the trade was difficult as the shares had likely been traded again.

When even South Korean lawmakers protested, arguing that even if the court ruling stood, so shares could be returned out of courtesy, Chief Cabinet Secretary Shinji Hayashi expressed displeasure, saying: ‘It’s a shaless act. They don’t know sha for their mistakes, don’t know how to keep promises, and don’t know how to follow the law. South Korea must respect the judgnt of the Japanese court.’

In the end, Hansu Securities went bankrupt. The stock was delisted, employees lost their jobs, and minority investors shed tears.

All this happened because of one mistake.

Let’s think about it.

oracle predicted that OTK Company would acquire Toyota stock. This ans the transaction will actually take place.

The sa order error isn’t likely to happen two or three tis, so we have to assu it happens in a single instance.

To sell shares, you first need to own them. So, who in the world holds this many Toyota shares?

There’s no need to even look it up; there’s only one place.

That is…….

“The Governnt Pension Investnt Fund of Japan.”

***

Japan’s Governnt Pension Investnt Fund (GPIF).

Similar to South Korea’s National Pension Service, it’s an institution that invests and manages the retirent funds of the Japanese people.

“Its current assets under managent are 150 trillion yen.”

Taekgyu’s jaw dropped.

“That’s over 1,600 trillion won.”

“It’s one of the largest in the world.”

Japan isn’t an international financial center, but its economy is so large that it has many global investnt banks (IBs).

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

I looked up related information.

Pension funds, being massive, invest in assets worldwide for risk diversification. GPIF also invests globally, including in Japanese stocks, bonds, and real estate.

When pension funds invest, they usually entrust the managent to multiple institutions through a bidding process.

“GPIF’s stock investnts were originally managed by five or six firms, including Nomura Securities. But after Pri Minister Okazaki took office, they started consolidating the mandate into one firm, Nishida Securities.”

It’s the world’s largest pension fund. The potential profits from managing it were enormous.

Thanks to this, Nishida Securities, which had perpetually been ranked 4th, rose to 2nd place in the industry and has grown enough to threaten Nomura Securities.

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

Japan modernized and underwent its industrial revolution earlier than most European countries. Consequently, capitalists erged early on, and they grew into conglorates (zaibatsu) through World War II and the post-war recovery.

Taekgyu nodded.

“Ah! Zaibatsu.”

I asked in surprise,

“How did you know?”

Just as Korean conglorates are referred to as ‘Chaebol’ internationally, Japanese conglorates are known by the proper noun ‘Zaibatsu’.

“It sotis appears in ani or light novels.”

“…….”

I see.

Anyway, the Endo Group is a war-profiteering enterprise that grew by supplying military goods during World War II. It was dismantled after the war, but the group’s parent company, Endo General Trading, survived by changing its na to Endomori.

“Pri Minister Okazaki’s wife is Aoko Okazaki. Her original na was Aoko Musaka.”

“In Japan, won usually take their husband’s surna upon marriage.”

“Right. And Aoko Musaka’s maternal grandfather was Tetsuro Endo, who served as the chairman of Endomori. Now, Mrs. Aoko’s younger brother—aning Pri Minister Okazaki’s brother-in-law—is a director there.”

In Korean terms, it’s like entrusting the National Pension’s dostic stock investnts to a brokerage firm closely connected to the First Lady’s family.

“And there were no issues?”

“Of course, there were.”

When this fact beca known, the opposition parties fiercely attacked the LDP (Liberal Democratic Party). They claid it was blatant favoritism.

Pri Minister Okazaki offered this explanation:

‘The allegations of preferential treatnt towards Nishida Securities are false. The public pension fund has been managed laxly until now. There were many unreasonable practices, such as paying managent fees regardless of profit or loss, and no one taking responsibility for losses. This was an unavoidable asure to reduce fees and improve operational efficiency. Please understand.’

However, he avoided directly addressing the relationship between his wife’s family and Nishida Securities.

The opposition threatened to open an audit, summon everyone involved, and conduct a thorough investigation. As the offensive intensified, Pri Minister Okazaki, instead of clarifying, went on the offensive himself, changing the focus of the debate:

‘Since entrusting Nishida Securities, the public pension fund’s dostic stock investnt return rate has hit a record high, increasing the people’s retirent assets. What’s the problem with that? If we entrusted it elsewhere and the return rate fell, would the opposition mbers take responsibility then?’

After Pri Minister Okazaki took office, the LDP revised the articles of incorporation to significantly increase the pension fund’s dostic stock holding ratio, aiming to stimulate investnt. They also reduced corporate taxes and injected fiscal funds to boost the stock market.

Coupled with the weak yen, the Nikkei index, which had hovered around 10,000, surged past 20,000. Naturally, the return rate more than doubled.

Regardless of the process, few people dislike making money. Japanese public opinion leaned towards supporting Pri Minister Okazaki, and the attacking opposition party retreated without gaining anything.

In the process of increasing its dostic stock investnt ratio, GPIF heavily bought Toyota shares. This was because its profitability improved due to the weak yen, and it was the No. 1 company by market cap on the Nikkei.

Institutions generally aim for stable investnts and prefer large companies. Similarly, South Korea’s National Pension Service holds the largest amount of Seosung Electronics among dostic stocks.

GPIF’s holdings of Toyota stock are known to be over 10 percent, amounting to 15.2 million shares. Could a situation arise where these shares are accidentally sold for 1 yen per share?

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

A single mistake would wipe out 2.3 trillion yen of the Japanese people’s retirent funds!

“And we would make 25 trillion won.”

Taekgyu’s jaw dropped again in astonishnt.

“That’s huge.”