Japan’s SoftBank shares slide 7% as tech stock options bets unnerve investors

FILE PHOTO: Japan's SoftBank Group Corp Chief Executive Masayoshi Son bows his head after his presentation at a news conference in Tokyo, Japan, Nov. 5, 2018. REUTERS/Kim Kyung-Hoon/File Photo

SoftBank Group Corp closed down 7% as the conglomerate’s bets on equity derivatives tied to listed technology companies made investors uncomfortable amid a decline in markets.

Shares fell below 6,000 yen for the first time in two months to 5,881 yen. The group was the biggest loser in percentage terms on the benchmark index, which closed down 0.5%.

The Japanese financial powerhouse has spent billions of dollars buying shares in technology companies such as Amazon as it parks cash generated by a massive asset sale programme.

The group has also made significant options purchases in tech companies, sources familiar with the matter told Reuters, in an aggressive bet by Chief Executive Masayoshi Son on rising tech stocks.

Options of $4 billion generated an exposure of about $50 billion, 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 to SoftBank last year, said on Twitter he had been “dazzled” by the markets and lost 4.4 billion yen ($41 million) 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.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.