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

Stock MarketsSep 07, 2020 02:20AM ET
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© Reuters. FILE PHOTO: FILE PHOTO: The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo

By Sam Nussey

TOKYO (Reuters) - 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 (NASDAQ:AMZN) 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.

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

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Comments (5)
TL Chan
TL Chan Sep 09, 2020 12:30AM ET
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They messed up my chart!
TL Chan
TL Chan Sep 09, 2020 12:21AM ET
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Robinhood's blind buy practice has to take half of the responsibility of attracting Softbank option pump. They together made the market a mess!
Jose Emenis
Jose Emenis Sep 06, 2020 10:27PM ET
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This explains why all the big tech stocks are overvalued by 75% to 80%.....
Plopseven Schwartz
Plopseven Schwartz Sep 06, 2020 8:57PM ET
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This is so much riskier than 2008 with mortgage backed securities. Why is a bank allowed to have billions of dollars worth of call options active?!
Joe Yang
Joe Yang Sep 06, 2020 8:57PM ET
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Softbank despite its name is not a bank, LOL
Zach Lohman
Zach Lohman Sep 06, 2020 8:57PM ET
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The company is a mix of phone operations and investments, mainly in tech. It has nothing to do with banking.
Steve Page
Steve Page Sep 06, 2020 8:57PM ET
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They’re betting with money they can afford to lose. Lehman Brothers and the gang obviously werent
Jay West
Jay West Sep 06, 2020 8:57PM ET
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Joe Yang good info to know for context.
Plopseven Schwartz
Plopseven Schwartz Sep 06, 2020 8:57PM ET
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Semantics. If you have billions to throw at call options, you’re a investment fund or bank. Done-zo.
Yankee Steve
Yankee Steve Sep 06, 2020 8:55PM ET
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I like to see the market drop like s rock to punish these speculators
Leon Kelly
Leon Kelly Sep 06, 2020 8:55PM ET
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hater
Rambi Zambi
Rambi2019 Sep 06, 2020 8:55PM ET
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Get dome help man
Rambi Zambi
Rambi2019 Sep 06, 2020 8:55PM ET
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Get dome help
Plopseven Schwartz
Plopseven Schwartz Sep 06, 2020 8:55PM ET
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Rambi Zambi you can give me “dome help” whenever you want
 
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