In the executive office with its sweeping view of the East River beyond a wall of glass, Seok-won sat comfortably on a plush sofa, flanked by Landon on one side and Andrew on the other—Andrew having recently been promoted to Chief Investment Officer in recognition of his performance.
After Daisy, the secretary, set down a tray of tea and quietly exited, Seok-won leaned back against the soft cushion and spoke.
"I hear some warning signs are starting to appear in Thailand."
Receiving the cue, Andrew responded with a serious tone.
"Yes. Starting with Citi and Société Générale, many foreign banks and investors who had previously invested heavily in Thailand are suspending new loans and beginning to pull out their investments."
"There's probably growing concern that Thailand won't be able to repay its external debt, which is nearing 70 billion dollars."
Seok-won's composed reaction suggested he had anticipated this development. Andrew continued.
"When the economy is growing rapidly, even large debts aren't necessarily a problem. But the moment growth stalls, that debt becomes a major burden."
Seok-won nodded in agreement, and Landon naturally joined in.
"Compared to last year, the growth rate has dropped by more than 2%. On top of that, Thailand's domestic real estate market has frozen up, causing prices to crash. That's triggering a chain reaction—banks that issued too many high-risk loans are now seeing a surge in bad debt, which is only deepening the anxiety."
"And with the current account deficit continuing to grow, there's bound to be increasing pressure for the baht to depreciate."
"Exactly," Andrew said with a nod.
"Wasn't it projected that Thailand's current account deficit could surpass $15 billion this year?"
"That's right. Based on our analysis, the deficit could reach around $15 billion, which is roughly 8% of their GDP."
"Eight percent of GDP… With a deficit that high, it would be more surprising not to see a crisis."
"The more troubling issue is that this isn't just a temporary spike. The deficit has been growing steadily, and the scale keeps getting larger."
Even on second thought, it was uncanny how closely Thailand's situation mirrored that of Korea: slowing growth and a ballooning current account deficit.
'And it's not just Korea and Thailand. Indonesia, the Philippines—pretty much every Asian country except Japan must be facing similar risks.'
In hindsight, if Korea had been in slightly weaker economic shape than Thailand, it could've easily become ground zero for the Asian financial crisis instead.
Shaking off the thought, Seok-won turned back to Andrew.
"I doubt the Thai government is unaware of what's happening. How are they responding?"
"As you said, they seem to sense that things are getting serious. Apparently, they're planning to replace the finance minister soon in an attempt to calm foreign investors."
"What exactly are they planning to do?"
Seok-won leaned forward with interest. Any moves could directly impact the upcoming battle with hedge funds.
"There's talk of launching a major fiscal austerity plan, slashing tens of billions of dollars from the government budget. At the same time, they're expected to tighten lending regulations and push for mergers and acquisitions of failing banks."
"That's quite a bold set of reforms. If they pull it off, it might actually help ease investor concerns."
Andrew responded, though, with a skeptical tone.
"Only if they pull it off. But I doubt it'll be that easy."
"Why do you think it'll be difficult?"
"For starters, launching austerity measures in a weakening economy is already controversial. Not only the opposition, but even members within the ruling coalition are voicing criticism and resistance."
Unlike Korea, Thailand had adopted a parliamentary system where the executive branch is formed by the majority party in the general elections.
But since no single party secured a majority in the last election, the ruling party had been forced to form a coalition with smaller parties—each with its own values and interests, inevitably leading to internal discord.
"In fact, some within the opposition and the coalition itself are pushing for the exact opposite—expanding fiscal spending to stimulate the economy. Given that, the chances of the reforms succeeding are extremely low at this point."
"Now that you put it that way, I can see that."
Indeed, if reform had been successful, Thailand likely wouldn't be on the verge of a financial crisis.
As Seok-won picked up the teacup in front of him and took a sip of his now lukewarm coffee, Landon spoke.
"Hedge funds will probably make their move soon, targeting a devaluation of the baht. Should we join in when the time comes?"
Andrew's eyes sparkled as he looked at Seok-won.
After sitting in thought for a moment with his arms crossed, Seok-won finally shook his head and spoke.
"Let's sit out the first round and just observe."
His unusually cautious stance drew a curious look from Landon, who asked,
"Do you think Thailand can withstand an attack from the hedge funds?"
"There's no doubt warning signs are flashing," Seok-won replied calmly, "but with foreign reserves of 38 billion dollars, even if they're attacked, they're not going to collapse overnight."
Andrew immediately countered.
"They may have substantial reserves, but considering over a trillion dollars is traded daily on the international forex market, if the hedge funds go all in, those reserves could evaporate in no time."
Landon added,
"Exactly. Even the proud Bank of England and Japan threw everything they had into defense, and they still had to surrender in the end."
It was hard to argue—if even economic powerhouses like the UK and Japan couldn't hold out, it seemed obvious Thailand would fare worse.
"True, Thailand is weaker compared to those two. But there's one important advantage they have—something the UK and Japan didn't."
"What would that be?"
"The bilateral agreements Thailand signed with neighboring countries last year."
Realizing what he meant, Landon and Andrew let out low murmurs of understanding.
"Ah."
"Right. I'd forgotten about those."
Watching the Bank of England and Japan fall under hedge fund attacks had jolted central banks around the world. It made them realize they could be next, and in response, some Asian nations began to forge agreements—forming an informal alliance to support each other in times of crisis.
Thailand, for example, had signed pacts with Singapore, Hong Kong, Malaysia, and others, ensuring that in the event of a currency crisis, their central banks would step in to help.
"One stick is easy to break," Seok-won said, "but tie a bunch together, and it's a different story."
Andrew gave a slow, thoughtful nod.
"If the neighboring countries step in to support Thailand, it definitely won't be an easy fight."
"Especially if Hong Kong joins in, we can't expect an easy victory," Landon added, his face tightening.
As Asia's financial hub, Hong Kong not only held massive foreign reserves—92.8 billion dollars—but also had a deep understanding of global finance, unlike many other regional players. It wouldn't be an easy target for hedge funds.
"Plus," Seok-won continued, "the last two cases showed everyone what happens if you rush in first—you shoulder all the risk. That's why even if hedge funds do attack, they'll probably start with light jabs to test the waters."
"You're saying no one wants to play Don Quixote and charge in first, only to end up as cannon fodder helping Thailand's central bank burn through its dollars."
"Exactly."
Landon licked his lips with a thoughtful look of agreement.
"Well, I wouldn't want to be the one doing all the heavy lifting for others either."
"Exactly. So when the hedge funds start their attack," Seok-won said calmly, "we'll do the opposite—start buying baht."
"...!"
Landon and Andrew stared at him with wide eyes, caught completely off guard by the unexpected instruction.
"You mean we go long on the baht? Not short?"
"That's right."
Seok-won remained composed as he watched their disbelief.
"Like I said earlier, while the hedge funds hesitate and try to feel each other out, Thailand will go all in to defend its currency. That makes it very likely the Bank of Thailand wins the first round."
Realizing what Seok-won was aiming for, Andrew's eyes lit up, and he leaned forward.
"Ah, then instead of falling, the baht would actually rise."
"Exactly. And since it's a high-risk move, the hedge funds that initiated the attack will take a significant hit. But that doesn't mean they'll throw in the towel."
Landon nodded, picking up the thread.
"They wouldn't have gone all in from the start anyway. And even if the baht is defended, the Bank of Thailand's reserves would be severely depleted. That'll tempt the funds to come back even harder before the central bank has a chance to recover."
Seok-won gave an approving look at Landon's sharp analysis—worthy of someone running a hedge fund that even Wall Street watched closely.
He laced his fingers and rested them on the sofa's armrests as he continued.
"By then, Thailand's defenses will be weakened, and it'll be hard for them to withstand a second attack. So we'll reverse our position just before that—sell off the baht."
Landon slapped his knee in admiration.
"You're planning to ride the waves like a surfer and profit from both the ups and downs of the baht."
Andrew, too, looked at Seok-won with genuine awe.
"Unbelievable… I never would've thought of that."
Though he appeared calm, Seok-won knew the truth—if it weren't for his memories from before his return, he never would've risked a high-wire act like this. He'd have simply gone with the safer play—shorting the baht.
'Try to catch both ends of the swing and mistime it, and you don't just lose the profit—you get wiped out.'
But because he knew how things were likely to unfold, he could afford to bet this boldly.
'Still… better to tap the bridge before crossing it.'
With his presence already altering events in subtle ways, there was no guarantee the crisis would play out exactly as he remembered. Once this Asian financial crisis passed, even more would change, and the future might no longer match what he once knew.
"If things go the way we expect, great. But we should keep a close eye on both the hedge funds and the Bank of Thailand. Be ready for any surprises."
"Yes, understood."
Landon gave a short nod, then asked with anticipation glimmering in his eyes—clearly excited by the potential profits.
"So how much should we place for our first bet?"
"If we go in with too much at once and the hedge funds take heavy losses, we might end up becoming the variable instead of just riding the wave. Let's keep it modest—around a hundred million dollars."
Landon nodded, though a slight hint of disappointment crossed his face.
"A bit of a shame, but I get it. This is just a warm-up before the real game starts anyway. I'll set it up like that."
"I agree—that sounds like the perfect amount," Andrew added.
"But even if the Bank of Thailand manages to defend the baht, the stock market will still take the full brunt of the shock and crash hard. That means our options contracts will more than make up for it, so there's no need to feel like we're missing out."
Thinking of the CDS option contracts they'd secured with Japanese securities firms, both men broke into wide grins.
"Ah, right—we've got that in our back pocket too."
"If the Thai stock market tanks, those Japanese firms that sold us the CDS options are going to be holding their heads in despair."
TL/n -
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