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Ⓒ JoongAng Ilbo / JoongAng Ilbo Japanese version2021.03.31 07:57
Ripples caused by South Korean investor Bill Huang (Hwang Seo In Guk), who is active in the United States, are shaking the American stock market. Alkegos Capital, led by Huang, was notified by a Wall Street investment bank of a request for additional margin due to a large investment loss. Goldman Sachs, Morgan Stanley, Credit Suisse, Nomura Securities and others have forcibly disposed of $ 30 billion shares that Arquegos was unable to pay the margin.
The mandatory disposal is carried out when the value of the shares, etc. presented by investors as collateral to investment banks falls below a certain level. The investment bank asks for the moment and demands that the guarantee be replaced because the value of the guarantee is insufficient. Goldman Sachs and Morgan Stanley were unable to accept the additional margin payments, and Goldman Sachs and Morgan Stanley fought on the 26th to sell the shares provided by Arquegos as collateral. However, Nomura Securities and Credit Suisse are estimated to have responded relatively late and suffered large-scale losses.
According to the Financial Times and Bloomberg, Huang has been investing aggressively with up to five times the leverage. If the price of the invested assets increases in this way, it is possible to aim for a rate of return of up to five times. However, if the price of the invested assets falls, the loss will increase five times. Mr. Huang’s actual wealth is estimated to be between $ 5 billion and $ 10 billion. However, the share prices of the companies in which Arquegos invested have recently plummeted and Huang’s investment loss has skyrocketed. Representatives include US media company Biocom CBS and China Baidu. Biocom CBS ‘stock price, which had topped $ 100 on the New York Stock Exchange on the 22nd, fell to $ 47 on the 29th.
“A deal with a US client could cost $ 2 billion,” Nomura Securities said. Nomura did not identify the client as Arquegos, but said the Wall Street Journal was associated with Arquegos as an anonymous source. Nomura Securities’ share price plummeted 14% from the previous day on the New York Stock Exchange on the 29th. Credit Suisse has taken the position that it will “have a significant impact on results for the January-March quarter. “. Credit Suisse’s stock price fell 11.5% on the 29th. The market capitalization of both companies has dropped by about 8 trillion won in one day.
On Wall Street, Huang, a former Tiger Management graduate, is nervous because his investment style points to weaknesses in the current financial system. The Financial Stability Oversight Commission (FSOC), which includes the United States Treasury and the Federal Reserve Board (FRB), called a meeting on the 31st. This is the first time since the inauguration of US President Joe Biden. . The main agenda is the movement of hedge funds since the new coronavirus. The date of the meeting was planned in advance, but the issue of Arquegos and the loss of financial companies can also be discussed.
Mr. Huang was unable to conduct financial transactions until early last year. According to The Wall Street Journal, he was convicted in 2012 of insider trading. At that time, $ 16 million was seized and $ 44 million was paid in compensation. Then, in April of last year, the US Securities and Exchange Commission (SEC) lifted restrictions on financial transactions and reappeared on Wall Street.
Born in South Korea and transferred to the United States in his junior year of high school, Mr. Huang earned an MBA from Carnegie Mellon University after graduating from the University of California, Los Angeles. After working for Hyundai Securities, he worked for Julian Robertson, CEO of Tiger Management, which was once the largest hedge fund in the world. After that, he ran the Tiger Asia Fund, which invests primarily in the Asian market, and was also called “Tiger Cub”.
