SoftBank shares fall after Vision Fund announces another big loss

TOKYO, Nov 14 (Reuters) – Shares of Japanese SoftBank Group Corp (9984.T) plunged on Monday after the company reported a heavy loss in its investment arm Vision Fund for the third consecutive quarter.

Shares fell 13% in early afternoon trading, heading for their biggest one-day loss in more than two and a half years.

Analysts, however, said the share price tumble was partly a pullback after a strong rally that had been driven by hopes of further share buybacks. As of Friday’s close, shares of SoftBank had gained more than 40% since October.

“Various expectations, including another round of share buybacks, have pushed up their stock price, and they are now in an adjustment phase,” said Shinji Moriyuki, an analyst at SBI Securities.

Just a day before Friday’s quarterly results, SoftBank announced the completion of its plan to spend 400 billion yen ($2.88 billion) to buy back its own shares.

Jefferies analyst Atul Goyal said in a note to clients, “We were looking for another round of takeover announcements, but there were none.”

SoftBank Corp. A placard is prepared during a ceremony marking the company’s debut on the Tokyo Stock Exchange in Tokyo, Japan December 19, 2018. REUTERS/Issei Kato/File Photo

Market analysts said concerns about weakness in tech stocks are another factor weighing on shares of SoftBank, which is betting heavily on the growth of high-tech companies.

“The outlook for IT (information technology) companies is bleak amid the slowing global economy,” said Shigetoshi Kamada, managing director of Tachibana Securities’ research department.

“Expectations for SoftBank Group’s growth have declined on concerns that the value of its portfolio companies will not rise in this environment.”

The Vision Fund recorded investment losses of 1.38 trillion yen ($9.9 billion) in the three months to September 1. 30 as the value of his portfolio continued to fall. Read more

But SoftBank as a whole posted its first quarterly profit in three quarters, buoyed by the reduction of part of its stake in Chinese group Alibaba Group Holdings (9988.HK).

SoftBank shares were still up 11% year-to-date, far outpacing the 27.6% drop in the Nasdaq (.IXIC) and the 2.6% decline in the Nikkei average (.N225 ).

($1 = 138.9900 yen)

Reporting by Kiyoshi Takenaka, Junko Fujita; Editing by David Dolan and Edwina Gibbs

Our standards: The Thomson Reuters Trust Principles.

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