Stock rout in Japan wipes out $15 bn of SoftBank Group Corp's value

By Min Jeong Lee

A stock rout in Japan wiped out $15 billion of SoftBank Group Corp.’s value on Monday, after the company’s biggest single-day fall since 1998.
 

The technology giant’s stock fell 19 per cent, the worst performance since SoftBank listed on the Tokyo Stock Exchange in 1998. The stock has now extended its decline for the September quarter so far to 38 per cent, in line to be the biggest such drop since 2001. 
 

The plunge comes as founder Masayoshi Son prepares an investment blitz in AI and semiconductor technologies. The global market rout also threatens to hurt SoftBank’s Vision Fund unit, which holds investments in hundreds of technology startups. 
 

The stock turmoil erased $2.9 billion of Son’s own personal wealth in a single day, according to the Bloomberg Billionaires Index. Son’s seen more than $5 billion of his worth vanish over the last three trading days, erasing much of his wealth gains since the start of the year and making him one of the hardest-hit tycoons in Asia.
 

“AI’s hype is fading now that there’s a greater focus on AI companies’ ability to deliver revenue and earnings,” Bloomberg Intelligence analysts Marvin Lo and Chris Muckensturm wrote in a note. “SoftBank’s AI investment strategy might help the company return to profitability, but it might not be smooth sailing with execution risk high.” 
 

The Topix and Nikkei 225 Stock Average tumbled 12 per cent Monday on a surge in the yen, tighter monetary policy and the deteriorating economic outlook in the US. SoftBank is scheduled to release its quarterly results Wednesday, when it’s expected to report a slim profit. 
 

“The selloff is overdone,” said Kirk Boodry, an analyst at Astris Advisory. “The last time SoftBank Group traded like this was the capitulation trade when Covid fears swamped markets and the discount to net asset value was almost 70 per cent at one point.”  
 

The discount has expanded to 57 per cent today as markets account for higher volatility and risk for SoftBank investments, according to Boodry. The day’s stock declines are not wholly tech-related and reflect rising concerns over a stronger yen and geopolitical risks surrounding the Middle East, he added.