SoftBank Vision Fund reports record loss of $ 27 billion as technology stocks fall

SoftBank founder Masayoshi Son said there was “confusion in the world” in markets as well, due to a number of factors, including Russia’s invasion of Ukraine, high inflation and central bank action to raise interest rates. These factors contributed to a record annual loss in SoftBank’s Vision Fund.

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SoftBank on Thursday, it reported a record loss in its investment unit in the Vision Fund as technology stocks were hit by rising interest rates and Beijing’s regulatory measures hurt its Chinese assets.

The Vision Fund of the Japanese giant reported a loss of 3.5 trillion yen ($ 27.4 billion) for its fiscal year ended March. 31, the biggest loss since the creation of the investment fund in 2017.

The troubles of the Vision Fund contributed to a record 1.7 trillion yen annual loss for the entire SoftBank group. Its shares closed 8% lower in Japan on Thursday.

SoftBank’s Vision Fund invests in high-growth stocks and is the brainchild of founder Masayoshi Son as a way to reposition the company as an investment intermediary.

But global markets have been shaken as investors compete violent inflation and the US Federal Reserve raising interest rates which led investors to run away from high-tech stocks.

The ongoing Russian war against Ukraine and the revival of Covid-19 in China and subsequent blocking of the financial megacity Shanghai, there has raised concerns about global growth and added additional pressure on the markets.

Son said during a profit presentation Thursday that these factors have caused “confusion in the world” and in markets, according to an official translation.

South Korean e-commerce company Coupang, which went public last year in the United States. and declined by nearly 60% this year, was one of the companies that contributed to the loss of the Vision Fund. Singaporean riding giant Grab and an American delivery company Door plate were among the other sad performers in the portfolio.

SoftBank also recorded write-offs in the valuations of some of the private companies in which it invests.

Son said the company would go into “protection” mode as a result of the headwind. This will include having “stricter” criteria for new investment and more conservative when it comes to the pace of new investment.

Investment in China is falling

SoftBank has a large exposure to China through its investments in the e-commerce giant Ali Baba and a vehicle company Didi.

Both companies have seen a sharp drop in their share prices due to Beijing’s widespread repression of the domestic technology sector and tighter regulation in areas of data protection to antitrust.

In April 2021, which falls in the last financial year of SoftBank, Alibaba was fined $ 2.8 billion in antitrust. Its shares have fallen by about 31% since the beginning of the year.

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