Chapter 235: The Oracle of Delphi (7)
It was clear from the start who would bet on the Chinese market.
And now, all the players we could recruit in this space were already on board.
If capital was still lacking?
There was only one thing left to do.
"Time to expand the playing field."
A few days later.
China's major state-run media outlets simultaneously released reports with the same tone.
<Chinese government to announce 'special emergency measures' to stabilize the financial markets..>
The article quoted a senior official, and the wording was quite strong.
<The recent turmoil in the financial markets was caused by the organized intervention of certain external speculative forces, which is a provocative act that directly threatens China's economic and financial sovereignty. ... (omitted) ... We consider this a serious challenge to financial security and will mobilize all national resources to respond decisively.>
The use of terms like 'financial sovereignty' and 'financial security' indicated that the issue had been elevated to the level of national security.
<We will deploy all available resources to maintain market stability and protect financial order, and we will apply a zero-tolerance policy to hold those responsible for these illegal and unethical acts strictly accountable.
The government is preparing comprehensive measures to safeguard the financial markets, which will be officially announced next Monday....>
This was not a simple policy announcement; it was an ultimatum.
It was a blatant warning that if we didn’t voluntarily withdraw by next Monday, they would retaliate without mercy.
Of course, I had no intention of backing down.
But that was only my own decision.
“Sean, at this rate....”
“Are you really planning to go through with this? It's not too late to pull out now...”
At Pareto Innovation’s office, a suffocating sense of tension had hung in the air for days.
The employees' faces were all painted with anxiety and fear.
"That Chinese article is practically a declaration of war. If we withdraw now, we could at least avoid the worst-case scenario..."
"No, that's not the case. In fact, if we pull out now, it will cause even bigger problems."
"I'm not talking about fund returns right now...!"
"Neither am I talking about money. What I mean is, if we pull out now, it will be impossible to contain the situation."
At my words, everyone fell silent.
Everyone knew it.
At this point, after offending them to such a degree, withdrawing midway could actually backfire.
"Think of it this way. If a fight ends halfway, only resentment remains, but if you see it through to the end, it can be cathartic and even strengthen relationships. People say you grow through conflict..."
But then—
“You’ll be assassinated.”
Dobby’s voice cut me off.
“If it were me, I’d just take you out and be done with it.”
I could see several people nodding in agreement.
Emboldened by the reactions around him, Dobby raised his voice further.
"The important thing is that China might not just target you alone, but might act on a larger scale to make an example out of you. At this rate, it wouldn’t even be surprising if we had a so-called 'mysterious gas leak incident' in our office building!"
"No, the risk of biochemical weapons is even greater..."
They weren’t joking.
They were genuinely concerned about our safety.
That’s why we hired a top-tier security firm to sweep the office thoroughly every morning, and stationed former special forces personnel at the entrance.
But even with all these precautions, there were still employees too scared to come to work, so we had to allow remote work.
And that wasn’t all.
The employees had even voluntarily pooled money to buy me a bulletproof vest, and Gonzalez took it one step further.
“Use this.”
What he handed me was a helmet.
“I thought you might need it.”
“A helmet?”
“Yes. If I were China…”
Gonzalez smiled and pointed to the center of his own forehead.
“They won’t aim for somewhere random. They’ll try to take you out in one shot.”
"It’s a bulletproof helmet. NIJ Level IIIA, it can stop 9mm and .44 Magnum rounds. It won’t stop a rifle, though..."
A rifle? Are we supposed to prepare for that too?
When I picked up the helmet Gonzalez had given me, it was pretty heavy.
But there was no way I was going to walk around wearing that thing, so I set it down.
"I’m a fairly well-known public figure. China wouldn’t be reckless enough to do something like that."
That’s what I said…
But in truth, just in case, I had bodyguards with me and only used vehicles equipped with bulletproof glass.
Still, I drew the line at wearing a helmet.
In any case.
My decision was firm.
“We’re going to maintain our China positions.”
In other words, we were going to ignore China’s ultimatum.
Thus, the one-week grace period they had given us expired, and Monday arrived.
***
Monday.
China activated the previously announced 'emergency measures.'
But the intensity of those measures far exceeded expectations.
<Hong Kong brokers: leverage ratio raised sharply from 20% to 50%>
<Hong Kong securities lending volume plummets... short-selling costs skyrocket>
<Global investors now required to disclose positions under new regulations>
Foreign investors, unable to invest directly in China’s domestic markets, typically routed their investments through Hong Kong.
But overnight, Hong Kong’s financial regulations had been turned upside down.
It was a tremendous shock.
In the past, no matter what measures China took domestically, they were seen as internal matters affecting their own citizens.
But this time, the target was global investors.
Thus, these measures dealt a serious blow to the international status and credibility of Hong Kong, known as a 'global financial hub.'
And this was only the beginning.
<China’s State Administration of Foreign Exchange to Significantly Tighten Overseas Remittance Procedures>
China’s State Administration of Foreign Exchange announced that it would strengthen its review procedures for overseas remittances, citing “temporary technical issues” as the reason.
But the true intent was clear.
—From now on, any money earned in China could not be sent abroad without government approval.
Since China had already required global investors to disclose their positions, they could now see exactly who was betting on a decline in the Chinese market.
And there was no way they would allow those investors to move their money out of the country.
In other words, even if you made money, you wouldn’t be able to take it out.
The effect was immediate.
<Global Funds Begin Large-Scale Exit from Chinese Market>
No matter how high your returns, if you can’t repatriate the funds, those numbers become meaningless.
Many hedge funds, prioritizing the avoidance of losses, rushed to liquidate their positions.
The Chinese government didn’t miss the opportunity.
<First Round of Government Support Funds Injected... Totaling 350 billion yuan>
Following government orders, state-owned banks, state investment funds, and state pension funds all moved to buy up assets.
Moreover, they kept emphasizing the word “first,” hinting that more interventions could follow.
The effect was immediate.
The Shanghai Composite Index surged from 2,800 points to 3,200 points in just a few days, and with expectations of further intervention, it was on the verge of surpassing 3,500.
At this, cries of despair arose among the investors who had bet on the market’s decline.
—Broker: “Long time no see, it’s a margin call!”
—Their accounts were bleeding, and now they had to decide—lock in the loss by exiting or hold like a brainless monkey?
—No, watching China panic like this, it looks ready to blow.
—Barely hanging on with life support... but what if the oxygen gets pulled? Diamond hands are standing by.
In fact, most of these measures only reinforced investors’ conviction that the Chinese market was doomed.
If a house were sound, would the owner be hammering away in a panic like this?
And without caring about what the neighbors think?
But predicting a collapse and betting on it were two very different matters.
—When do we get out?
—First, check if it’s even possible... the Chinese government says they won’t settle trades.
—How much longer do we hold? And what if margin requirements keep rising?
—I know this house will collapse someday. So when exactly will that be?
If the government’s emergency measures kept working, the collapse could be delayed much longer than expected.
But in the meantime, China’s new policies would keep increasing the financial burden on investors.
In short, the longer you waited, the higher the cost would become.
To hold or to cut losses.
As opinions remained divided, everyone turned their gaze to one place.
And as always, that place was Ha Si-heon.
<Exclusive! Ha Si-heon: “Predicted China’s Extreme Response!”>
—If the situation worsens, China may take even more extreme measures, like increasing transaction costs for foreign investors.
Cheers erupted everywhere.
Because in the video, Ha Si-heon had accurately predicted even the latest extreme moves by China.
Which meant he probably also knew how to respond next!
But then,
<Unfortunately, this is where the pre-recorded interview ends.>
The broadcast was cut off.
Without revealing the most anticipated conclusion.
—They’re cutting it here? Seriously?
But just as viewers were getting restless.
The screen changed to show the inside of the studio.
And sitting there was... none other than Ha Si-heon.
***
It was my first live broadcast in a while.
This time, it was a panel discussion format.
Right from the start, one panelist came at me sharply.
It was a Chinese-American economics professor.
“Many investors who bet on the Chinese market’s decline based on Ha Si-heon’s predictions are now in trouble.”
His tone was as if to say, “This is all your fault.”
“But you knew exactly what was going to happen. While you avoided losses, those who followed you are still stuck.”
He clearly came here with the intention of attacking me.
But I simply replied with a bitter smile.
“Yes, I am very sorry about that. I truly wanted to help people prepare...”
And here, I gave a look of regret.
“But if I issue advance warnings about market movements, it’s considered market manipulation. So I was forced to remain silent.”
There was a clear reason why I hadn’t been able to warn people ahead of time.
Because the government told me not to.
And with the SEC already investigating me, I couldn’t risk stepping out of line.
“Besides, I didn’t expect the situation to spiral this far. My ‘predictions’ were merely one of many possible outcomes... I never thought they would become reality.”
“Oh... then you’re saying Pareto didn’t base its investments on those predictions?”
This guy was persistent.
“We simply hedged. Like buying fire insurance. People who buy fire insurance do pay premiums just in case, but if a fire actually happens, they’re still surprised.”
“Then tell me—did you exit in time during this ‘fire’?”
His eyes gleamed.
Clearly, he wanted to paint a picture where Pareto cashed out while retail investors got burned.
But he was out of luck.
“No, we are still holding our positions.”
“What?”
The professor looked momentarily flustered, and the host quickly interjected.
“Then, do you still believe the Chinese market will crash?”
“Yes.”
“When do you expect that to happen?”
“Within a few weeks at most.”
“A few weeks...?”
Doubt flashed across the faces of the panelists and the host.
Then the Chinese-American professor frowned and countered.
“That’s absurd. While the Chinese market does appear shaky, with the government going all out to defend it, it won’t collapse within a month or two. Besides...”
His gaze turned toward me.
His mouth twisted.
“With all this speculation, there aren’t many left with enough margin to keep attacking, unlike you.”
It was a fair point.
For the bubble to truly burst, retail investors and short-sellers needed to pile in.
But China’s recent actions had driven most short-sellers away.
Even so, I responded firmly.
“That’s exactly why it will take about a month. Because of those who left.”
“What do you mean?”
“The market operates purely on supply and demand. Right now, even though demand is high, supply has been artificially cut off.”
The short-sellers hadn’t exited because they doubted the collapse.
In fact, their conviction had only grown stronger.
In other words, demand remained hot.
It was just that supply was blocked.
Because China had closed off all channels and was demanding exorbitant tolls.
However, “Such market-distorting regulations can backfire. And if you forcibly block the market while demand is surging...”
I met the host’s gaze.
A signal to explain it simply for the viewers.
I offered a light analogy.
“China thinks it can just block the river. Up till now, that worked. When the current is gentle, a dam holds. But what happens when the river floods?”
Even the sturdiest dam won’t help.
No matter how much you block it, the water will find another way.
“That flow will inevitably find a new path.”
“You mean they’ll create a workaround?”
“Exactly. Right now, there are plenty of forces wanting to bet against the Chinese market. The stock market path is blocked. So there’s only one option left—they’ll shift to channels China can’t control.”
“No way...!”
The professor’s face hardened.
He seemed to understand what I meant.
I nodded and said, “Yes, precisely... the currency market.”