Photo = AP
The market turned upside down as a block deal worth 19 billion dollars (about 21.5 trillion won) was poured into the US New York Stock Exchange on the 26th (local time). But still, who and why did the block deal remain a mystery. The foreign press and Wall Street believe that the margin call is the cause. But on Wall Street, there are growing concerns that “there could be more block deals.”
The reason why the block deal was urgently poured out during the intraday on the 26th
According to foreign media on the 28th, a large block deal was held in the New York Stock Exchange on the 26th through US investment banks Goldman Sachs and Morgan Stanley. A block deal is a transaction in which a large number of stocks are discounted from the recent stock price and passed to large investors such as institutional investors. It usually ends before the market begins, and intraday block deals rarely occur.
Before the opening of the New York Stock Market on the 26th, the block deals of Chinese companies Baidu, Tencent Music, and VIP Shop stocks were completed through Goldman Sachs. Until then, it could be understood that an investor who had in mind the possibility of a decline in the stock prices of Chinese companies that were simultaneously listed on the US stock market started a block deal. This is because the US Securities and Exchange Commission (SEC) is more likely to evict Chinese companies from the New York Stock Exchange.
However, the market was shocked when the block deal proceeded during the intraday. Not only Chinese online video platform IQi and Chinese education company GSX Techedo, but also US media companies such as Viacom CBS and Discovery, and UK fashion platform Farfetch stocks were sold as block deals. It is known that a large block deal took place on an intraday, extremely rare in Wall Street history. “It was my first sight during my 25 years of experience in the financial sector,” said Mitchell Kush, manager of Bellevue, a Swiss asset management company.
The stock prices of companies that came out as block deals plummeted. On the same day, the shares of Viacom CBS and Discovery in the New York Stock Market fell more than 27% in one day. Bloomberg News reported that the market capitalization of companies subject to block deals evaporated by $35 billion.
What is the cause of a family office’s margin call? Wall Street “Can’t rule out the possibility of an additional shock”
CNBC cited sources and reported that the family office, Akegos Capital, is behind the block deal. Akegos Capital is known for its hedge fund strategy, investing primarily in Asian and US stocks. CNBC reported that funds other than Akegos Capital also participated in the block deal. Akegos Capital has not made a stand.
Wall Street believes that it is highly likely that Akegos Capital has suffered a margin call. Margin call refers to a request to compensate for a lack of margin due to losses or the like. This is because the fact that the block deal was suddenly started during the day and the transaction method and size were changed unusually even after the block deal started, which can infer that the seller of this block deal is in a very urgent situation such as margin call.
However, some point out that it is difficult to say that a large amount of block deals occurred due to margin calls at several family offices. “Now the question is whether additional block deals will occur on the 29th and 30th,” said Oliver Fuchch, vice president of wealth management firm Wellspire Advisor. Said.
Reporter Gowoon Lee [email protected]
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