June 24, 1997.
Summer had arrived early, and for days, a scorching heatwave had pushed temperatures above 30 degrees Celsius.
Although the temperature dipped slightly at night, the heat that had accumulated in the city's asphalt roads and concrete building walls during the day radiated back out, leaving many people tossing and turning, unable to sleep.
Seok-won was also awake past midnight—but not because of the sweltering weather.
As he poured a glass of the newly released Johnnie Walker Pure Malt 15-Year over a round ice cube in his rocks glass, he held his phone in the other hand, speaking with Landon in New York.
[As you expected, Taiwan's central bank has preemptively loosened its exchange rate band. The Taiwan dollar is plunging—it's already dropped to 30 TWD per USD.]
"The currency crisis moving north from Southeast Asia makes a depreciation inevitable anyway. Better to let it fall now than wait and get beaten down later."
[Still, Taiwan has a lot to offer. Do you really think hedge funds won't target it?]
Setting down the whiskey bottle, Seok-won picked up his glass and walked into the living room as he replied,
"Taiwan has $83 billion in foreign reserves—third only to Japan and Hong Kong. And unlike the Southeast Asian countries, they've been strict on lending ever since their housing market took a hit a few years ago. No real estate bubble to speak of."
Standing in front of the large floor-to-ceiling window, Seok-won gazed calmly out at the glittering city nightscape and continued,
"In other words, they've built high and solid walls. And considering their economy is smaller than Japan's or even Korea's, there's more downside than upside in trying to breach Taiwan's defenses."
[Now that you explain it, I see your point. There's no point in breaking down the Taiwan dollar if there's nothing substantial to gain.]
"Exactly. And with a formidable target like Hong Kong on the table, hedge funds probably don't have the luxury to divert attention elsewhere. That also works in Taiwan's favor."
Thanks to its rock-solid buffer of foreign reserves, Taiwan had managed to stay out of the path of the violent storm—the financial crisis sweeping through Southeast Asia and creeping northward.
Korea, on the other hand, had relatively little foreign currency reserves, a ballooning current account deficit, and a mountain of short-term foreign debt—making it an irresistible and vulnerable target for currency speculators.
"Any signs of movement from Quantum Fund?"
Taking a sip of whiskey from his rocks glass, Seok-won asked.
[No. After unwinding most of their positions, they've been quiet.]
"The Southeast Asian currency crisis is still raging. If they're staying silent, it likely means they're gearing up for something big."
[That's what I believe too.]
"With Hong Kong scheduled to be handed back to China in a week, we'll see some kind of move soon."
[Then it's likely they'll start selling Hong Kong dollars in the forward market to mount pressure.]
Seok-won gave a slight nod in agreement.
"Most likely. Once the attack begins, both the Hong Kong dollar and the Hang Seng Index will plunge."
[If Hong Kong raises interest rates to defend the currency, stock prices will inevitably fall.]
If high interest rates made risk-free bank deposits attractive, there was no reason to invest in risky assets like stocks. Naturally, money was flowing out of the stock market.
"The Hang Seng Index closed at 16,148 today."
[That's correct.]
As Seok-won gently swirled his whiskey glass, ice clinking inside, he spoke.
"Before George Soros makes a move, short Hang Seng futures and take a bearish position."
[How big should we bet?]
"This is a sure win. Go as big as we can—dump every futures contract we can sell."
[Understood.]
Landon agreed without hesitation. He shared the same outlook.
If his memory was correct, the Hang Seng Index had already been slashed in half from its peak.
Hedge funds, including George Soros's, had anticipated that the Hong Kong government would eventually be unable to tolerate the stock market's collapse and would capitulate by devaluing the Hong Kong dollar.
But defying all expectations, Hong Kong authorities chose to defend the currency at all costs—even at the expense of a tanking stock market.
"The ones caught in the crossfire were the individual investors who had poured their savings into Hong Kong stocks."
Of course, global institutional investors with stakes in Hong Kong also suffered massive losses. The fallout even spread across the Pacific, shaking up the New York Stock Exchange.
"What's the status on the Dow futures short positions?"
[Given the massive size of the order, I thought it would take time to sell off everything, but demand's been strong. At this pace, we'll finish building the position within the week.]
The team had dumped an enormous $4.44 billion worth of Dow futures—$4.12 billion in profits from the ringgit bet, plus Daheung Group's spare $320 million. And yet most of it had already been absorbed by buyers, which surprised Seok-won.
"Didn't we use leverage too?"
[Yes, but we kept it conservative—just 3x. The base bet was already huge, so there was no need to push the risk.]
In an era when 10x leverage was standard, using just 3x was considered extremely prudent.
[With the dot-com boom in full swing, both Nasdaq and the Dow are soaring. Everyone seems to believe the rally will continue.]
Seok-won nodded, understanding now.
"So people are rushing to buy futures, expecting to profit as the Dow climbs."
[Exactly. At this rate, we could probably offload even more contracts.]
"Good to know there's plenty of buying interest."
A smile crept across Seok-won's lips.
But a sudden thought crossed his mind—could his massive short position in Dow futures be the very thing that triggered a larger-than-expected drop in the New York market?
"Even though the U.S. stock market accounts for more than 60% of global equity markets, $13.32 billion in short-selling is still big enough to cause a shockwave."
The dot-com bubble was still red-hot, so a full-on collapse was unlikely. But this could trigger a crash rivaling Black Monday a decade earlier.
Then, a glint of anticipation flashed in Seok-won's eyes.
"In that case, we could end up making far more than we originally hoped."
[If the Dow plunges like you predicted, the funds and investment banks that bought futures will scramble to cover their losses. They'll have no choice but to dump their stock holdings, which will deepen the decline—and work in our favor.]
Landon added with a mischievous chuckle:
[At this rate, Boss, we might see a wave of traders getting fired from Wall Street before the year ends—all thanks to you.]
"The more traders get sacked, the fatter your bonus envelope gets, doesn't it, Landon?"
[Hahaha. I suppose it does work out that way.]
Seok-won chuckled at Landon's playful tone.
"Anyway, the Quantum Fund will probably make a move soon. If you see any signs, contact me immediately."
[Understood.]
With that, the call ended. Seok-won took another sip of his chilled whiskey as he stared out at the glittering night skyline.
***
Quantum Fund Headquarters, 7th Avenue, Manhattan, New York
George Soros sat in the middle of a wide leather sofa in the executive suite, flanked by Rodney, the CIO, and Ian, the chief manager. The three men were watching a massive television screen across from them.
Live footage from the Hong Kong Convention Center's Grand Foyer showed the historic ceremony marking the handover of Hong Kong's sovereignty.
Huge British and Chinese flags adorned the walls, and over 4,000 distinguished guests from both countries had gathered to witness this momentous event.
[Today's solemn and extraordinary event marks both change and continuity in Hong Kong's history. As agreed in the 1984 Joint Declaration between Britain and China, today's ceremony signifies the return of Hong Kong—after more than 150 years of British rule—back to China… Both governments have agreed to uphold Hong Kong's current laws and freedoms, maintain its autonomous legislative system, and preserve its distinct trade and financial systems… We will watch with great interest as Hong Kong embarks on this new chapter in its history."]
As the Prince of Wales concluded his formal speech in full ceremonial dress, the clock ticked toward 11:59 PM. The British military band solemnly played "God Save the Queen."
At that moment, the Union Jack and the colonial Hong Kong flag—previously hanging from the podium—were slowly lowered.
Rain had been falling since the beginning of the ceremony, drenching the guests and the flags alike. It seemed to cast a somber veil over the event—as if foreshadowing a gloomy future for Hong Kong.
Then, as the clock struck midnight on July 1st, Hong Kong time, the Chinese national anthem resounded through the hall. The red five-star flag of China and the new Hong Kong SAR flag were hoisted. The hall erupted in applause and cheers.
Shortly after, the Chinese president took the podium to deliver a celebratory speech, officially declaring to the world that Hong Kong had returned to the embrace of China.
When the ceremony ended, the royal yacht Britannia, carrying the Prince of Wales and the British delegation, slowly departed from Victoria Harbour. A grand fireworks display lit up the skyline behind the towering skyscrapers, celebrating the historic handover.
Watching the long handover ceremony with quiet fascination, George Soros finally spoke, a cigarette nestled between his fingers.
"A truly historic moment."
Ian, the chief manager, nodded in agreement.
"Now that Britain's lost even the 'Pearl of the Orient,' the once-glorious British Empire has truly faded into history."
"Yes, I'd say that's a fair conclusion."
For a brief moment, George Soros appeared nostalgic as he watched the image of the royal yacht recede into the dark, fireworks blazing behind it on the television screen.
Then, after stubbing out his half-smoked cigarette in the ashtray, George Soros turned his gaze toward Rodney on his left and spoke.
"I feel a little bad for spoiling the party, but now—right after the handover, when things are still chaotic—is the most vulnerable moment. We can't afford to waste such a golden opportunity. Begin the attack as planned."
"Then I'll start selling Hong Kong dollars in the Tokyo forward exchange market."
"Go ahead."
George Soros stared intently at the television, where the dazzling fireworks continued to burst across the screen, and murmured,
"Let them enjoy the celebration while it lasts. The party ends tonight."
Then, sinking deep into the sofa, he smiled—a dark, predatory grin forming on his lips as though he were a hunter staring down irresistible prey.