Block Deal Shakes Wall Street, Japanese Nomura Also Suffers $2 Billion Loss... Bond Issuance Canceled

Large Block Deal on Wall Street on the 26th (Local Time)
Behind It: Korean-American Investor Bill Hwang

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Nomura Holdings, Japan's largest financial investment firm, announced that it suffered a massive loss amounting to 2 billion dollars. Nomura only explained that the loss was due to an 'event' that occurred during transactions with a U.S. client, but the industry believes it is linked to a large-scale block deal that shook Wall Street on the 26th (local time). Korean-American investor Bill Hwang is mentioned as being behind the scenes.

According to major foreign media including Nihon Keizai Shimbun on the 29th (local time), Nomura Holdings, Japan's largest investment bank, stated in a press release that one of its U.S. subsidiaries may incur a loss of 2 billion dollars (approximately 2.26 trillion won).

Nomura said, "The subsidiary may be sued due to an event that occurred on the 26th during transactions with a U.S. client," and added, "We are currently evaluating the possibility of loss and the impact on the consolidated financial statements."

Following Nomura's announcement, its stock price fell 16% on the Tokyo Stock Exchange that day.

Nomura also added that it would cancel the bond issuance originally planned due to this loss.

Although Nomura did not explain the 'event' in detail, Wall Street believes it is related to the unprecedented 19 billion dollar block deal that occurred on the 26th. According to major foreign media, Nomura was confirmed as one of the major banks that traded with Arkeogos Capital, along with Goldman Sachs, Morgan Stanley, Credit Suisse, and UBS.

On the 26th (local time), the New York Stock Exchange saw a block deal approaching 10.6 billion dollars (about 12 trillion won) executed in three rounds before and during market hours through Goldman Sachs' window. A block deal refers to a transaction where a large number of shares are bought and sold, often outside the market, at an agreed price.

On the same day, approximately 8 billion dollars were traded in two rounds of 4 billion dollars each during market hours through Morgan Stanley's window.

The large-scale sell-off that day caused significant turmoil in the U.S. stock market, and it was confirmed that Korean-American investor Bill Hwang was behind it. Goldman Sachs, which traded with Bill Hwang, sold shares worth 10.6 billion dollars through block deals in off-market transactions that day.

Foreign media pointed out that this incident was caused by the investment failure of Arkeogos Capital, led by Bill Hwang. As the stocks invested in by Arkeogos plummeted, the banks that provided margin trading demanded margin calls, leading to this situation. A margin call means requiring additional collateral when losses occur on futures contract margins or fund investment principal.

This incident is expected to inevitably impact Nomura's performance. Nomura recorded a pre-tax profit of 396.9 billion yen (about 4.1 trillion won) from April to December last year, a 45% increase compared to the same period the previous year.

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