Friday, December 4, 2020
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SoftBank sheds $8.9bn as ‘whale’ options bets unnerve traders


Shareholders in SoftBank wiped nearly $9bn off its market value on Monday after weekend revelations that the Japanese conglomerate was the mystery “whale” that had driven US technology stocks to record highs.

The Financial Times reported on Sunday that the group’s trading strategy meant it was now sitting on gains of about $4bn after founder Masayoshi Son drove aggressive bets on equity derivatives.

Traders in Tokyo said the report had helped crystallise the perception among some investors that SoftBank’s behaviour as a company increasingly resembled that of a hedge fund, populated with former investment bankers with a massive appetite for risk.

SoftBank shares lost 7.2 per cent on Monday — a fall that erased ¥946bn ($8.9bn) from the company’s market capitalisation. The benchmark Nikkei 225, in which SoftBank is the second biggest component, according to Bloomberg data, dropped 0.5 per cent.

Before the fall on Monday, SoftBank’s stock had climbed 33 per cent this year. The slide followed two days of declines on the Nasdaq at the end of last week.

It also came on the heels of warnings from Yunosuke Ikeda, Nomura’s Japan equity strategist, that the early part of September could usher in a broader sell-off of tech stocks in Tokyo as institutional investors return from vacation and unload stocks left overvalued by summer options purchases by individuals.

“For institutional investors who understand how options trades work, many don’t anticipate a major impact on SoftBank’s earnings,” said Naoki Fujiwara, a fund manager at Tokyo-based Shinkin Asset Management. But he said retail investors “are worried the derivatives trades will lead to major losses again”.

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