Date: Mon, 7 September 2020
Authors: Sam Nussey; Editing by Tom Hogue and Muralikumar Anantharaman
With its recent bets on equity derivatives tied to listed technology companies, the move has made investors of SoftBank uncomfortable, causing a 7% slide in shares.
For the first time in 2 months, shares fell below 6,000 yen (42.74 pounds) to 5,881 yen. The conglomerate was the biggest loser in percentage terms on the benchmark index .N225, which closed down 0.5%.
With cash generated from a massive asset sale programme, the Japanese financial powerhouse was able to purchase billions of dollars’ worth of shares in technology companies such as Amazon AMZN.O.
The group has also made significant options purchases in tech companies, in an aggressive bet by Chief Executive Masayoshi Son on rising tech stocks, said sources familiar with the matter.
Options of $4 billion generated an exposure of about $50 billion (37.87 billion pounds), the Wall Street Journal reported. The group has made $4 billion in trading gains from those bets, the Financial Times reported.
SoftBank has previously declined to comment on the trades.
The group frequently hedges its exposure and it is unclear how much profit will be delivered by the trades, which underscore Son’s undiminished risk appetite even as some analysts warn of sky-high valuations.
“When there is a tech bubble, Masayoshi Son is usually not too far away from the action,” Amir Anvarzadeh, market strategist at Asymmetric Advisors, wrote in a note.
Another Japanese billionaire, Yusaku Maezawa, who sold his online fashion retailer Zozo Inc 3092.T to SoftBank last year, said on Twitter he had been "dazzled" by the markets and lost 4.4 billion yen betting on stocks.
SoftBank’s shares have been boosted by a record share buyback in recent months but the group has indicated those purchases will slow, providing less support for the stock.
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