National Tide 1980.

In mid-October 1989, a Japanese businessman, during a reception dinner for his visit to the United States, remarked, "Japan no longer needs to learn anything from the United States; in everything, Japan has surpassed the United States."

This confidence stemmed from the then-unstoppable Japanese economy and stock market.

It's no wonder that's the case.

At this time, although the United States was about to defeat the Soviet Union in the Cold War, it also appeared very weak due to excessive consumption of national strength.

In contrast, Japan at this time not only withstood the yen appreciation crisis brought about by the Plaza Accord and the "Black Monday" that once made global stock markets tremble, but also took the opportunity to sweep across global financial markets.

In 1989, the Japanese economy and stock market reached their peak since the bubble economy, making it an epic year.

The Japanese stock market continued its upward trend, truly ushering in an era of nationwide stock trading. This also caused the Tokyo Stock Exchange's trading commissions to surpass those of Wall Street in New York, making it the world's highest.

Although the Japanese authorities, under pressure from both inside and outside the country, have begun to crack down on the overheated stock market and have introduced a series of financial tightening policies, the Nikkei index continues to defy the odds and keeps hitting new highs.

It broke 33,000 in March, 35,000 in August, and 37,000 in October...

At this time, the market capitalization of the Japanese stock market had reached 1.5 times that of the United States, equivalent to 45% of the total market capitalization of all listed companies worldwide.

Nine of the world's top ten banks are from Japan.

The total market capitalization of the Tokyo Stock Exchange surpasses that of the long-established financial market of London. The combined market capitalization of all stocks in the German stock exchange is still less than that of NTT alone.

In Tokyo's foreign exchange market, daily trading volume far exceeds that of New York.

That year marked the third consecutive year that Japan ranked first globally in net outward investment.

The recurring return of Japanese listed companies also reached a record high of 18.8%.

Therefore, in the eyes of some scholars and experts, Japan does indeed have a strong momentum to replace the United States and dominate the world economy.

Not only did some people publish predictions in newspapers, saying that "the Nikkei index will soon rise to 60,000 points."

Even economist Haruhiko Kuroda, who had previously warned the Japanese government about a stock market bubble, has now turned bullish.

Even George Soros, the financial magnate who once predicted the downfall of the Japanese stock market, has changed his mind at this moment, saying that "the world's economic and financial power is shifting from the United States to Japan."

In fact, almost everyone who is immersed in it believes that there will be a new peak tomorrow.

Nomura Securities, whose market capitalization now exceeds the total of all securities firms in the United States, had already achieved a net profit of 500 billion yen at the beginning of the fourth quarter of this year and is expected to achieve a net profit growth of more than 30%.

Driven by their own interests, they consider themselves the standard-bearers of the bull market.

So they confidently placed a full-page advertisement in the newspaper to publicly refute those who questioned whether the Japanese stock market was overheated and whether stock prices were inflated.

Those who are bearish on the Japanese stock market are stubborn and incorrigible, just like old-fashioned people who still believe in the geocentric model, while comparing themselves to Copernicus, who overturned the heliocentric model.

In response to some investors' concerns, Nomura Securities sales staff often say, "There is no such thing as gravity in the Japanese stock market."

The implication is that even if the stock price is already sky-high, there's no need to worry.

It must be said that the frenzy in the stock market often leads to an unhealthy ego, causing people to overlook potential problems.

This is Japanese society today.

Of course, besides the fact that the current bullish market shows no signs of trouble, there is another more important reason why Nomura Securities is so bullish on the Japanese stock market: Nomura Securities' almost superstitious belief in the unique system of "cross-shareholding" in the Japanese financial world.

Moreover, the person who led this system and ensured its smooth operation in the Japanese financial world was none other than Setsuya Tabuchi, the chairman of Nomura Securities.

The so-called "cross-shareholding" system is characterized by A holding shares in B, B holding shares in C, and C holding shares in A...

In a bear market, this system can stabilize stock prices and prevent companies and securities firms from rushing to sell their own shares due to funding needs, which could lead to further market pessimism and trigger huge market fluctuations.

In a bull market, the assets of companies A, B, and C will appreciate, meaning that their holdings in other companies will also appreciate.

This, in turn, stimulates the rise in its own stock price, thus forming an interactive upward relationship and creating a bubble-like bull market mechanism.

Therefore, in a sense, "cross-shareholding" can be seen as a strength of Japanese capitalism.

It can not only indirectly adjust supply and demand in relation to stock issuance, but also limit the downside potential of stocks.

It also strengthens corporate ownership, avoiding the risk of Japanese companies being maliciously acquired by foreign entities, and is a system that allows all shareholders to benefit from it.

However, it does not conform to the original mechanism of capitalism.

During Japan's economic recession in 1965, Setsuya Tabuchi, then head of the general management department at Nomura Securities, used this method to reduce Nomura Securities' inventory and debt, which allowed Nomura Securities to differentiate itself from other securities companies during the subsequent Japanese economic recovery and quickly become a leader in the Japanese securities industry.

Around 1970, with the development of capital liberalization, a large number of foreign conglomerates entered Japan to make equity investments.

Setsuta Tabuchi also used the same method to help Nomura Securities' domestic corporate clients stabilize their shareholders and avoid being acquired by foreign capital.

After 1980, Setsuya Tabuchi used cross-shareholding to keep the Japanese stock market frozen, creating the necessary conditions for its rise.

In summary, Nomura Securities played a significant role in the Japanese stock market from the 1960s to the 1980s.

On the one hand, they promote the deepening development of the direct finance era by selling market-priced financial products to companies. On the other hand, they follow the requirements of companies and banks, and strive to maintain stock prices in accordance with the extremely Japanese philosophy of stabilizing shareholders.

This is why Nomura Securities was able to quickly differentiate itself from other securities firms during Japan's economic recovery and become a leader in the Japanese securities industry.

As for Tabuchi himself, his greatest contribution to the Japanese securities industry was promoting and popularizing cross-shareholding, a mechanism with uniquely Japanese characteristics. He is the man known in the Japanese financial world as "the man who froze stocks".

Therefore, both within Nomura Securities and in the Japanese securities industry, everyone regards Setsu Tabuchi as the next generation leader who can guide Japan's financial innovation, calling him a big shot in the securities market.

Especially after he succeeded Kitasato Kiichiro as chairman of Nomura Securities, industry insiders hailed him as "the leader of the Japanese securities industry".

Almost everyone in the Japanese securities industry believes that as long as he is in charge at Nomura Securities, and as long as the "cross-shareholding" system he created exists, the company will be a force to be reckoned with.

Therefore, the Nikkei index is unlikely to turn downwards, and a major stock market crash with a sustained decline is even less likely to occur.

They almost superstitiously believed that Setsu Tabuchi could use the "cross-shareholding" method to permanently prop up the Japanese stock market, and that the Nikkei index would only go up and never fall.

Wasn't last year's "Black Monday" the most powerful proof?

Stock markets around the world have collapsed; no market has been able to escape this disaster.

Only Japan withstood the stock market crash and recovered its upward trend in a very short time, leading the global market counterattack.

As a result, the Japanese securities industry not only generally harbors blind optimism about the future of the Japanese stock market and lacks respect, but also lacks vigilance against the dangers of the economic bubble bursting. Furthermore, no one has ever taken seriously the two nuclear-level time bombs invented by the Americans: "Nikkei Index Futures" and "Nikkei Index Options".

On the contrary, when Morgan Stanley, an American investment bank, asked the Japanese to act as market makers and wanted to launch and issue "Nikkei index put options," the Japanese securities industry regarded the shrewd Americans as huge fools, thinking that they were basically out of their minds.

Because in their minds, how could Japan's stock index possibly fall?
Don't just say everyone is speculating on real estate and stocks, creating a frenzy. Japanese companies are the world's most powerful leading companies, and any investor in the world who isn't stupid will invest their money in Japanese companies.

Moreover, given Japan's cross-shareholding system, it effectively locks up most of the circulating shares, giving them firm control and making a price drop virtually impossible.

So the Japanese gladly accepted the contract, meaning they thought the money was too easy to make and that the Americans were bound to lose.

Americans are all idiots. Why do we have to send them money? They're just paying us taxes for nothing. How could the Japanese stock market possibly fall?
Especially after the introduction of stock index futures, the Japanese stock market did not change its direction for a considerable period of time, and it only went upwards, making stock index futures a useless thing.

Everyone was placing long orders, there were no counterparties, and no one was opening short positions, which seemed to further prove the Americans' mistake—stock index futures seemed to be a useless thing.

Needless to say, based on the same line of thinking, when Hiroji Goshima, the general manager of Nomura Securities' Hong Kong branch, consulted a senior executive at headquarters about how to deal with Ning Weimin's request for short selling.

Ning Weimin, who wanted to short certain stocks, was also looked down upon by Nomura Securities, just like the Americans, and was regarded as a delusional fool by the executive director.

"Haha, he really said that? He's going to short EIE Group's stock just to retaliate?"

"Yes, that's not all. He also wants to short sell shares of Dentsu Group."

"What does this have to do with Dentsu? How could it?"

"I don't know the specifics, but I know that Dentsu and EIE colluded to do something detrimental to him, and he was very unhappy about it..."

"Haha, this is hilarious. I haven't seen anyone this audacious in ages, actually thinking he can short two major Japanese companies all by himself. I really admire his courage, but of course, I'm more curious about where his confidence comes from..."

"So... what is headquarters' stance? Will they agree to or refuse his request for securities lending?"

"Of course we agreed. Why would we refuse? We're just holding onto our stocks anyway. Lending them to him to sell will earn us commissions and interest. What's wrong with that?"

"But... won't EIE and Dentsu have objections? After all, they also hold our shares. Wasn't it precisely because of this that you agreed to President Takahashi's request to finance his forced liquidation?"

"It's alright, stocks aren't that easy to short. EIE is a company that's been buying land like crazy, its stock will only go up, not down. I'm sure Takahashi understands that too, so I'll just give him a heads-up later, he'll just laugh it off. Maybe he'll even use the opportunity to boost his own company's stock price, or announce some good news to teach that audacious guy a lesson. Haha."

"Well... he's demanding a 1:2 margin ratio for short selling from us. He's also worried we don't have enough stock to give him, and he's asking for an exclusive agreement to prioritize short selling of EIE and Dentsu's stock. Can I sign that agreement on behalf of the company?"

"Oh, he's got quite the appetite. Looks like he has some power. Signing is fine, but I want to know how much money he actually has in his account? Is it even necessary? I remember we hold about 3% of EIE's stock. EIE's market value is 2.6 trillion yen now. If he takes it all, that's 70-80 billion yen. If you add Dentsu, it'll probably be 150 billion yen. He'll have to give at least half of that. Does he have that much money?"

"Well, he actually does have one."

"Really? You're not kidding?"

“I’m not kidding, he can afford to pay even a 1:1 ratio.”

"Oh, as a Chinese person, he's such a lucky guy. He's given me a whole new perspective."

"That's exactly what I'm most worried about. To be frank, his account information at our branch shows that he's almost never made a mistake since opening the account. Except for a few losses in 1986, he's been making money all the time—not small profits, but huge profits. In just a few years, his assets have increased a hundredfold. I'm worried that if he's right, then we're in trouble..."

At this moment, for Hiroji Goto, there was no sound on the other end of the phone; it seemed that the executive director was also thinking seriously.

However, it didn't take long for the other party to give a positive reply, still sounding relaxed.

"It's alright, just do it his way. Don't worry about anything. Is he lucky? There have been many lucky people who have made a fortune in the stock market in recent years. There are more than twenty people on the rich list this year who made their fortune in the stock market, and Takahashi Harunori is one of them. He didn't miss out, but Takahashi didn't miss out either, and we certainly didn't miss out. Especially our Chairman Tabuchi, he certainly won't miss out. There's no chance of anything going wrong. The person who should really be worried is him. Do you think he'll jump off your brokerage if he really loses such a large sum of money? After all, if the price rises by another 33% after he sells, he'll be wiped out."

Some things in this world are just so interesting. When someone is scheming against someone else, they might be scheming against themselves.

In fact, around the same time, Ning Weimin, who was patiently waiting for a reply, was also saying similar harsh words to Kenichi Sagawa, just like the executive director of Nomura Securities.

"As long as they dare to die, I dare to bury them. We've been dealing with each other for a long time. You know all the deals I've made. I'll ask you, have I made any mistakes? If not even once, then what are you worried about? Believe me, there's absolutely no need for you to be anxious. The only ones you should be worried about now are our enemies. I'll ask you, if your boss eventually finds out that they only made a pittance of commissions and interest from us, but their own stocks and cross-positions with EIE and Dentsu have plummeted to worthless because of our short selling, and they have to face a loss of hundreds of billions of dollars that they'll likely never recover, what will they do? Will they cry or wet themselves? Will anyone take responsibility for this?" (End of Chapter)