SoftBank confronts renewed China risk as Didi backfires

Beijing’s crackdown on US-listed tech stocks spells trouble in vital market.

closer oversight by Beijing, online seminar, Nikkei Asia., partnership with Nikkei

China’s salvos of regulation aimed at its tech industry have caught SoftBank Group in the crossfire, deflating the value of stocks in its Vision Fund in a trend that raises questions for its investment strategy.

US-listed Chinese tech stocks are among the most visible benchmarks for billionaire SoftBank founder and CEO Masayoshi Son’s stock-picking prowess. Their performance over the past few weeks shows the same grim trajectory.

Top Chinese ride-hailing company Didi Global, which made its New York Stock Exchange in June, sank 37% between the end of that month and Wednesday’s close. Logistics platform Full Truck Alliance, another Vision Fund holding, tumbled more than 50%. E-commerce leader Alibaba Group Holding, in which SoftBank invests directly, slumped 14%.

All three companies have come under Chinese government scrutiny as Beijing clamps down on US listings, which are key to SoftBank’s exit strategy for tech unicorns. SoftBank Group’s own Tokyo-listed shares fell 10% over the same period.

Didi and Full Truck have both come under investigation by regulators, while Alibaba has been hit by a wide-ranging tightening of regulations that has market players worried. The Vision Fund may have billions of dollars in unrealized losses on its Didi stake, observers say.

Reports on Thursday said that SoftBank plans to sell 45 million shares in US ride-hailer Uber Technologies, worth about USD 2.1 billion based on Wednesday’s close. A source familiar with the situation said the decision was not related to Didi’s troubles, and SoftBank sold off 38 million Uber shares in January. But some observers speculate SoftBank is looking for ways to offset China-linked losses.

China is an important market for the Japanese tech group. After SoftBank first invested in Alibaba in 2000, the value of its stake swelled to make up more than half its portfolio at one point. While this share declined to 43% at the end of this past March, the stake is still worth around USD 115 billion.

The Vision Fund, which launched in 2017, has targeted leading Chinese startups. Unlisted companies in Vision Fund portfolios include ByteDance, operator of the popular TikTok short-video platform.

While listings in general tend to make companies much more valuable, offerings in the US, which has access to a broader investor base than China, typically provide a bigger boost. But the prospect of closer oversight by Beijing has clouded the outlook for American listings by Chinese businesses.

SoftBank’s financial strategy could be affected as well. One key indicator for the company is its loan-to-value ratio, or net interest-bearing debt divided by the value of its shareholdings. SoftBank aims to keep this below 25% in normal times and no more than 35% in times of market stress.

The figure was still low at the end of March, at 12%, but falling share prices push the ratio higher. SoftBank has borrowed against its Alibaba shares, and a decline in the value of this collateral could affect its access to capital.

SoftBank chief financial officer Yoshimitsu Goto indicated in an online seminar hosted by Nikkei Financial this month that the company has no intention of changing its investment strategy for the time being.

“The way of thinking about China is, in a nutshell, that we must overcome such country risks,” Goto said.

This article first appeared on Nikkei Asia. It’s republished here as part of 36Kr’s ongoing partnership with Nikkei.

News Related

OTHER NEWS

Prince Andrew: Photo of legal papers being posted to the duke released by lawyers for Virginia Giuffre

Photographs showing papers notifying Prince Andrew about a civil sexual assault case against him in the US have been released by lawyers for his accuser Virginia Giuffre. Among the photos ... Read more »

Fortnite adds another virtual influencer to its battle royale

Last season, one of the more curious additions to Fortnite was Guggimon, a terrifying-looking rabbit creature that also happened to be a virtual influencer with millions of followers on platforms ... Read more »

Random: I played Sea of Thieves via Xbox Cloud Gaming on a pirate ship IRL

© Windows Central Ocean Trip Jez 2021 There once was a ship that put to sea… I recently went on vacation to the Baltic Sea in North Germany. You’d think ... Read more »

Amazon says it's permanently banned 600 Chinese brands for review fraud

Remember when gadget vendors Aukey, Mpow, RavPower, Vava, TaoTronics and Choetech started mysteriously disappearing from Amazon’s online storefront, and it turned out Amazon had intentionally yanked them while vaguely gesturing ... Read more »

SpaceX's first private crew shows what they've been up to in orbit

It was a brief orbital talent show. “Hayley is a champ at spinning,” Sian Proctor, one of the four private citizens currently orbiting Earth inside SpaceX’s Crew Dragon capsule, said ... Read more »

Universal Credit: 'I can't afford to live without cutting back on food'

Step Change have warned cuts to Universal Credit and the end of the furlough scheme could leave people homeless. (PA Images) Hundreds of thousands of private tenants face a gruelling ... Read more »

Older people and men ‘more likely to suffer' with Covid even after two jabs

Older people, men and those from ethnic backgrounds are more likely to end up in hospital or die even after they have been double-vaccinated against Covid-19, researchers say. Scientists used ... Read more »

How to not get pricked by a North American porcupine

Crossing paths with a porcupine isn’t an experience you’ll soon forget—it’s hard not to be intimidated by a ball of spines the size of a small dog. But the animal ... Read more »

Mississippi pregnant women are being turned away by vaccine clinics

Mississippi health officials are sounding the alarm about some pregnant women being turned away when they go get a COVID-19 vaccine. © Provided by Daily Mail MailOnline logo The vaccines ... Read more »

The AirPods 3 are already in production, according to a new report

After months of rumors, it came as a surprise to some that Apple didn’t unveil the AirPods 3 at this week’s California Streaming iPhone 13 launch event.  © Provided by ... Read more »

Here's how the new iPad Mini compares to the last-gen model

With the announcement and impending release of the new iPad Mini and its revamped design, it might be all too easy to stan the new model and completely write off ... Read more »

AR hospital staff must stop using Tylenol to get exemption for vaccine

© Provided by Daily Mail MailOnline logo A central Arkansas hospital system is requiring staff members who receive a religious exemption from getting the COVID-19 vaccine to also give up ... Read more »

Everyone's favorite power tools are coming to Windows 11

Power users are in luck as not only are Microsoft’s PowerToys utilities coming to Windows 11 but they’ll also be available to download from the Microsoft Store for the first ... Read more »

AMD isn't prioritizing cryptominers over gamers as Radeon RX stock stays tight

AMD’s Chief Financial Officer, Devinder Kumar, said that amid a global shortage of semiconductors affecting everything from cars to graphics cards, Team Red isn’t prioritizing cryptominers over gamers in terms ... Read more »

Dezeen wins four prizes at AOP Digital Publishing Awards 2021

Dezeen has been named Best Small Digital Publisher of the Year and scooped three other prizes at the Association of Online Publishers‘ annual awards ceremony. © Provided by Dezeen Four ... Read more »

MG smashes sales records amid booming demand for its electric vehicles

© Provided by This Is Money MailOnline logo MG has smashed its sales records amid booming demand for its electric vehicles. The British motoring brand has sold its 20,000th car ... Read more »

Who gets COVID boosters? The FDA's expert panel says it's complicated.

On Friday, an advisory committee to the Food & Drug Administration voted unanimously in favor of providing a booster dose of the Pfizer vaccine to Americans aged 65 and older, ... Read more »

Look up MONDAY! Harvest moon will light up the night sky on Sept. 20

© Provided by Daily Mail MailOnline logo The Harvest Moon is set to light up the night sky on Monday, September 20, which will be the full moon closest to ... Read more »

Epic Amazon sale: $24.99 Blink Mini, smart TVs, $180 AirPods Pro, Fire TV Stick, more

We’re rounding up this weekend’s best deals from Amazon, which include incredible sales on everything from smart TVs, the AirPods Pro, and security cameras to robot vacuums, air fryers, and ... Read more »

Google Pixel Fold release date, price, news and leaks

At the moment there are only a few companies really making foldable phones, and Samsung is dominating the market with handsets like the Samsung Galaxy Z Fold 3. But it ... Read more »

Apple mandates frequent COVID-19 testing for unvaccinated employees

Apple is implementing a new COVID-19 testing policy for US employees who work out of its offices and retail locations. Moving forward, the company will require unvaccinated employees to get ... Read more »

The Best Space Heaters for Warming Up Your Office, Garage, or Home

Winter doesn’t seem so long and dark when you’re comfortable at your desk, workbench, or on the couch. A portable heater can go a long way to ensuring that. However, ... Read more »

Pfizer and Moderna have revealed the way they're tracking how long vaccine protection lasts

A woman receives a COVID-19 booster shot in Netanya, Israel, on January 19, 2021. Ronen Zvulun/REUTERS New data show how Pfizer and Moderna measure the duration of their vaccines' protection. ... Read more »

IDW moves comic book store distribution to Penguin Random House

© Provided by GamesRadar IDW Publishing IDW Publishing has announced plans to move its Direct Market comic book distribution from Diamond Comic Distributor to Penguin Random House Publisher Services (PRHPS) ... Read more »

U.S. probes possible insider trading at Binance - Bloomberg News

© Reuters/Dado Ruvic FILE PHOTO: Representation of cryptocurrency Binance is seen in this illustration (Reuters) – U.S. officials are examining possible insider trading and market manipulation at global cryptocurrency exchange ... Read more »

Peach Momoko draws Kamala Khan for Ms. Marvel: Beyond the Limit #1 variant

© Provided by GamesRadar Ms. Marvel: Beyond the Limit #1 Marvel has postponed its planned comic book limited series Ms. Marvel: Beyond the Limit, which was timed to thematically tie-in ... Read more »

Snoopy and the Peanuts gang return for annual celebrity golf tournament

© Provided by GamesRadar Schulz Celebrity Golf Classic Golf was a big part of the Peanuts comic strip and the life of its creator, the late Charles Schulz. That relationship ... Read more »

Why athletes find themselves needing hip surgery in midlife, and how hip resurfacing gives them a second shot at sporting glory

Even the most finely engineered machines experience wear and tear over time. Our bodies are no exception. One key joint in particular is subject to damage through overuse: the hip. ... Read more »

Five industries affected by automation right now

By Laura Vogel If you work in retail, food service, warehouses, or health care, your newest co-workers may be robots, not human. Automation is replacing many of the roles done ... Read more »

France recalls its ambassadors to US and Australia in submarine deal backlash

Watch: France to recall ambassadors after AUKUS submarine deal snub France on Friday said it was immediately recalling its ambassadors to the US and Australia for consultations after Australia struck ... Read more »

2 shocking stats that show why ‘vaccine apartheid' is getting worse

Catherine Cargill becomes one of the first people to receive a third dose in England, as the NHS begins its COVID-19 Booster Vaccination Campaign. (PA Images) “I would go one ... Read more »

Florida man used Disney employee iPad to magically skip lines

There are tons of books and blogs telling you how to have a magical Disney World experience, but one Florida man discovered the ultimate travel hack: using an app that ... Read more »

AT&T is now offering an incredible iPhone 13 Pro deal for free with trade-in

Pre-orders for Apple’s latest devices are now live and some tempting iPhone 13 Pro deals have already emerged. Right now, AT&T is giving customers the opportunity to bag the iPhone ... Read more »

SpaceX's Inspiration4 mission is all anyone can talk about in this week's science news

What else is there to say, this week was all about the lead up to and the successful launch of SpaceX’s historic all-civilian Inspiration4 space mission. The excitement for the ... Read more »

29 brilliant Halloween costumes for twins or siblings

— Recommendations are independently chosen by Reviewed’s editors. Purchases you make through our links may earn us a commission. Halloween is every kid’s dream. Free candy and you get to ... Read more »

What to do if your child is exposed to COVID-19 at school, from quarantine etiquette to testing

Kids in masks returning to school Los Angeles Times If your child is exposed to COVID-19, the whole family should prepare for some level of quarantine. An unvaccinated child should ... Read more »

Save big on ThirdLove's Internet-famous bra and underwear sets

— Recommendations are independently chosen by Reviewed’s editors. Purchases you make through our links may earn us a commission. If you’re ready for fall, internet-famous intimates brand Thirdlove is right ... Read more »

Taylor Swift Drops New Version of 'Wildest Dreams': 'Thought You Should Have My Version'

Taylor Swift Jordan Strauss/AP/Shutterstock Swifties — this is not a drill! Taylor Swift was once again keeping her fans on their toes as she dropped the newest version to her ... Read more »

Xbox Chaturdays 40: NVIDIA leaks some Xbox games

Join the conversation live! For episode 40 of Xbox Chaturdays we’ll be joined by the one and only Mr. Boomstick XL of Double-Barrel Gaming to discuss the massive NVIDIA GeForce ... Read more »