SoftBank Group sheds $15 billion on US tech stock rout

Platform News: Japan's SoftBank

SoftBank stocks were down 5 percent in afternoon trade on Wednesday, extending this week’s slump that’s wiped $15 billion in its market capitalisation, as investors worried about the conglomerate’s exposure to sliding US tech stocks.

The fall carries SoftBank’s share decline to 12% since sources told journalists at our news agency partner Reuters and other press late last week that the Japan-based business made big bets on equity derivatives attached to technology companies.

CEO Masayoshi Son said last month SoftBank Group Corp would place cash from an asset purchase programme in public stocks however the complex trades have caused jitters among retail investors in a business already widely viewed as opaque, analysts explained.

The team “needs to protect Masa’s reputation by making sure it is not seen as a short-term trading giant, which would warrant a much bigger discount,” Jefferies analyst Atul Goyal wrote in a note, referring to the gap between the value of its own assets and its market valuation.

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SoftBank’s purchase of call options as well as discuss buying, which provides access to a much greater volume of stocks on paper, is seen by analysts as having exacerbated the market’s run-up and subsequent sell-off.

SoftBank has previously declined to comment on the transactions.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Sam Nussey. Editing by Muralikumar Anantharaman and Christopher Cushing.

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