The Surge Behind US Tech Stocks Is SoftBank

9 Trillion Won Invested in Stock Spot and Call Options
Record Investment Scale Evaluated as Capable of Driving Overall Market Rise
Chairman Son Jeong-ui Shifts Investment Direction After Startup Investment and M&A Losses

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] It has been revealed that the main cause of the sharp fluctuations in the US Nasdaq market was SoftBank.

The Financial Times, The Wall Street Journal, and other English-language media reported on the 4th that the main buyer of call options on major tech stocks, known as the 'Nasdaq whale,' was SoftBank. This report came amid the Nasdaq market falling about 5% for two consecutive days. A call option is the right to buy stocks at a predetermined price even if the stock price rises.

According to documents submitted to regulatory authorities, SoftBank purchased call options worth nearly $4 billion (approximately 4.75 trillion KRW) on IT giants such as Amazon, Microsoft (MS), and Netflix, in a similar scale to their stock holdings.

The media evaluated that this was a scale large enough to trigger rapid market changes. The sellers of the call options bought the underlying stocks to hedge losses, causing the stock prices of those companies to rise. It is estimated that SoftBank made considerable profits thanks to the sharp rise in major tech stocks following these transactions.

The Wall Street Journal described SoftBank's massive but secretive investments as being so large that they lifted the entire market.

The Journal reported that while there had been widespread speculation about increased options trading related to the Nasdaq market recently, the party behind it was unknown.

The market focused on the fact that SoftBank, an investment firm, began stock and options trading after suffering large losses from its shared office company WeWork and the overlapping COVID-19 crisis. This was because SoftBank, which had focused on startup investments, showed a completely different investment behavior.

SoftBank Chairman Masayoshi Son announced on July 5 that he would create a new business division investing in the stock market, including a $555 million fund. Notably, one-third of this $555 million fund is Chairman Son's personal money. The fund is said to primarily invest in liquid, publicly listed companies by extensively utilizing derivatives and leveraged investments.

The Journal described this as "a shift in direction by Chairman Masayoshi Son, who is well known for long-term investments in emerging IT companies." IT investor Roger McNamee said, "If it is true that SoftBank is doing this, it would be a signal showing that the fundamentals (economic base) are disconnected from stock prices."

This content was produced with the assistance of AI translation services.