Wall Street on Friday emerged from a rare huge trading (block trade) frenzy, a total of 20 billion U.S. dollars worth of shares were taken off, now the reason behind the exposure, is likely to be the former Tiger Asia fund trader Bill Hwang (Bill Hwang, pronounced) Family office holdings tragically cut off, was forced to close positions. Now global traders are standing by to prevent the opening of the U.S. stock market on the 29th after the disk shocks.
Bill Hwang’s family office, Archegos Capital Management, was behind the unprecedented sell-off of shares in several Chinese technology and U.S. media giants on Friday, people familiar with the matter said.
Bill Hwang’s fund is rumored to have been cut off by a margin call it could not meet
Morgan Stanley traded about $13 billion in stocks, including boutique shopping platform Farfetch, U.S. media giant Discovery, and land stocks Baidu and Heilongjiang, sources said. Goldman sold $6.6 billion worth of Baidu, Tencent Music and Vipshop shares before the U.S. market opened, according to an email to clients seen by Bloomberg.
Goldman then sold another $3.9 billion of ViacomCBS, Discovery, Farfetch, Aiki and Heilongjiang shares, the emails show.
IPO Edge, the media outlet that led the report, noted that Bill Wong’s fund is known for its use of leveraged investments. A person familiar with the matter said the fund received a margin call from an investment bank, but was unable to honor it, and as a result the bank and others began liquidating Archegos’ position.
This comes after Wall Street had been wildly speculating about the identity of the seller on Friday. The forced liquidation triggered price shocks for each tranche of stocks in the giant trade, sending shivers down traders’ spines.
● Global traders keep an eye on Monday’s market opening
ViacomCBS and Discovery are expected to recover lost ground on Monday and there is no change in market fundamentals, said Sharif Farha, portfolio manager of the Safehouse Global Consumer Fund in Dubai.
Farha said, “The pullback correction is not structural.” He expects the market to kick off Monday with moderate price action, but his expectations for the opening sentiment remain high, saying, “Traders around the world know the story and they will be glued to their screens.”
The possibility of more mega-deals still looms large, while in the meantime, end-of-quarter volatility could exacerbate the sharp swings in previously spiked stocks.
● ViacomCBS, Discovery have fallen 50% and 45% respectively last week
ViacomCBS closed down 27% to $48.23 per share on Friday, while Discovery fell 27% to $41.9 per share. Both stocks fell 50% and 45% respectively last week and have been sharply shorted as investors worry about the prospects of the two companies in a crowded media market.
As for mainland technology giant Baidu fell 18% last week, Tencent fell more than 33% and Vipshop fell more than 31%.
U.S. media outlet CNBC wanted to ask Archegos Capital for confirmation, but the company did not respond to phone and email contacts. Sources said the forced sale could be linked to a margin call due to the high leverage ratio.
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