Son Jeong-ui, Investment in China Suspended Due to Technology Regulations

Son Jeong-ui, Chairman of SoftBank Group (Photo by Bloomberg)

[Asia Economy Reporter Yujin Cho] Masayoshi Son, chairman of SoftBank Group, announced that he will halt new investments until regulatory uncertainties surrounding Chinese tech companies are resolved.

At a briefing on the Q2 earnings on the 10th, Son stated, "Regulations by Chinese authorities have become unpredictable and extensive," adding, "We plan to suspend investments in China until regulatory risks become clearer." He further said, "China remains a hub of innovation in technology and artificial intelligence, but the investment risks are significant."

Son also mentioned, "We are witnessing many new regulations emerging in China. We will maintain a wait-and-see stance until it becomes clear what regulations will extend how deeply and broadly, and how they will impact the market."

SoftBank Group is a major investor in Chinese tech giants such as Alibaba, the e-commerce behemoth, and Didi Chuxing, China's largest ride-sharing company. The Vision Fund's investment proportion in Chinese tech companies reaches about 25%.

Since its first investment in Alibaba in 2000, SoftBank Group currently holds a 24.85% stake, and it is the largest shareholder of Didi Chuxing with a 20.1% stake, which recently went public on the New York Stock Exchange.

On this day, SoftBank announced that its consolidated net profit for Q2 (April to June) was 761.5 billion yen (approximately 8 trillion won), a 39.4% decrease compared to the same period last year (1.2557 trillion yen). During the same period, revenue increased by 15.6% year-on-year to 1.4791 trillion yen.

Considering the base effect of last year's record quarterly net profit due to gains from the sale of shares in the major U.S. telecom company T-Mobile in Q2, the results are regarded as relatively solid.

Valuation gains of $5.2 billion from the New York listings of Didi Chuxing ($3.2 billion) and Full Truck Alliance ($2 billion), both invested in by the Vision Fund, were reflected.

However, the decline in corporate value of Korean e-commerce company Coupang (-$4.3 billion) and German online shopping mall Otto Group (-$500 million) during this period reduced the profit margin.

SoftBank's stock price closed slightly higher on the day but has fallen more than 35% from this year's peak.

The market assessed that disappointment over SoftBank's lack of additional share buybacks has lowered stock price expectations. Jeffrey analyst Atul Goyal said, "If SoftBank does not announce share buybacks, the stock price is likely to continue its downward trend."

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