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Good morning and welcome to our continued coverage of the world economy, financial markets, the eurozone and business.
Investors are bracing for volatility this week after a US investment fund, Archegos Capital, was forced to liquidate billions of dollars worth of positions after being hit by margin calls.
Archegos measure triggers huge volatility in parts of the markets and warnings from the Japanese bank Nomura and from switzerland Swiss credit this morning they will suffer losses as a result.
Last Friday, Wall Street was rocked by the mysterious sale of major stakes in Chinese tech giants and American media companies, including ViacomCBS, which fell 26%, and Discovery, which fell 27%. The scale of the decline raised suspicions that a large investor had struggled and was being forced to crash.
And over the weekend, the private investment firm Capital of Archegos has emerged as the company behind the sales.
It seems that Archegos He was hit by strong margin calls as his positions turned sour, creating a ripple effect when other lenders demanded his money as well.
Ajay bagga
(@Ajay_Bagga)The family office of former Tiger Management trader Bill Hwang was behind the unprecedented sale of some US stocks on Friday.
The banks forced Archegos Capital Management to sell more than $ 20 billion in shares after some positions moved against it.
Archegos is a “family office” that manages the private wealth of hedge fund manager Bill Hwang.
As the Financial times Explain,
The fund, which had large exposures to ViacomCBS and several Chinese tech stocks, was hit hard after shares in the US media group began to slide on Tuesday and Wednesday.
The drops prompted a margin call from one of Archegos’ top brokers, prompting similar demands for cash from other banks, people familiar with the matter said.
Traders buying the large blocks of stocks were told that the stock sale had been triggered by “forced deleveraging” by a fund. Archegos is a family office that manages the wealth of Bill Hwang, a “tiger cub” student of Julian Robertson’s legendary Tiger Management hedge fund.
Investors are now pondering whether Archegos’ emergency selling is over and whether its crisis will have broader ramifications, particularly in other funds with highly leveraged positions (making them vulnerable to margin calls if the markets move against them).
And already today, two financial institutions have indicated that they have been affected.
Nomura Holdings of Japan It warned that it faces a “significant loss”, perhaps $ 2 billion, from transactions with an unidentified US customer.
Nomura says it is still evaluating the extent of the potential loss and the impact on its bottom line, and has also canceled plans to sell dollar-denominated bonds while working on the math.
The news sent Nomura’s shares falling more than 16% in Tokyo.
Michael Brown
(@MrMBrown)
Katie Martin
(@katie_martin_fx)Oh boy …
Nomura shares plummet after the sale of $ 20 billion in US and Chinese shares: https://t.co/dt7Z55uYs6 via @FOOT
Swiss credit he is also involved in the consequences.
He warned this morning that “a US hedge fund client” It had not followed through on its margin calls, adding that the resulting loss could be “very significant” and will likely affect its first-quarter results.
Peter Thal Larsen
(@peter_tl)Credit Suisse, already facing a major blow from Greensill’s collapse, now expects a “very significant and material” loss from Archegos’ default. pic.twitter.com/pqhZCb3kvF
Dani burger
(@daniburgz)Nomura and Credit Suisse are now added to the list among banks warning of a significant loss, likely linked to trading from the big Archegos bloc.
Traders will also be keeping a close eye on the Suez Canal today, where days of efforts to swap out the massive container ship MV Ever Given are finally starting to pay off.
The Ever Given has reportedly been switched, nearly a week after blocking the waterway and creating a large backlog of shipping vessels. This has raised hopes that the 200,000 ton ship can be fully released soon.
The agenda
- 9.30am BST: UK Consumer Credit and Mortgage Approvals in February
- 3.30pm BST: Dallas Fed Manufacturing Index for March
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