SoftBank Vision Fund records a record loss of $ 27 billion as technology stocks plummet

SoftBank founder Masayoshi Son said there is “confusion in the world” and in the markets due to a number of factors including the Russian invasion of Ukraine, high inflation and central bank moves to raise capital. interest rates. These factors contributed to a record annual loss for SoftBank’s Vision Fund.

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Soft bank He posted a record loss in his Vision Fund investment unit Thursday, as tech stocks were hit by rising interest rates and Beijing’s regulatory crackdown hurt his holdings in China.

The Japanese giant’s Vision Fund posted a loss of 3.5 trillion yen ($ 27.4 billion) for its fiscal year ending March 31, the largest loss since the fund’s inception in 2017.

Vision Fund troubles contributed to a record 1.7 trillion yen annual loss for the entire SoftBank group. Its shares closed 8% lower in Japan on Thursday.

SoftBank’s Vision Fund invests in high-growth stocks and is the brainchild of founder Masayoshi Son as a way to reposition the company into an investment firm.

But global markets have been in turmoil as investors compete rampant inflation and the US Federal Reserve increase in interest rates which led investors to do so Escape from high-growth tech stocks.

The ongoing Russian war against Ukraine and a resurgence of Covid-19 in China and in next block of the financial mega-city Shanghai, ha It has fueled concerns about global growth and added further pressure on the markets.

Son said during an earnings presentation Thursday that these factors have caused “confusion in the world” and in the markets, according to an official translation.

South Korean e-commerce company Coupang, which went public last year in the United States. and it’s down nearly 60% this year, which is one of the companies that contributed to the loss of the Vision Fund. Racing giant in singapore of singapore dig and US delivery company door dashboard they were among the other bad artists in the portfolio.

SoftBank also recorded write-downs in the valuations of some of the private companies in which it invests.

Son said the company will go into “defense” mode due to headwinds. This will include “stricter” criteria for new investments and being more “conservative when it comes to the pace of new investments”.

China investment case

SoftBank has strong exposure to China through its investments in the e-commerce giant Alibaba and transport company didi.

Both companies have seen sharp drops in their share prices due to Beijing’s severe crackdown on the domestic tech sector and tougher regulation in areas to be data protection to the antitrust.

In April 2021, which is part of SoftBank’s last financial year, Alibaba was sanctioned with an antitrust fine of $ 2.8 billion. Its shares are down about 31% since the beginning of the year.