The block trades were linked to sales of holdings by Archegos, a source familiar with the situation said, confirming reports elsewhere. CNBC reported on Saturday that the selling pressure was due to liquidation of positions by family office Archegos Capital Management, citing a source with direct knowledge of the situation. The link with Archegos was also earlier reported by IPO Edge.
A person at Archegos who answered the phone on Saturday declined to comment. Archegos was founded by Bill Hwang, who founded and ran Tiger Asia from 2001 to 2012, when he renamed it Archegos Capital and made it a family office, according to a page capture of the fund's website. Tiger Asia was a Hong Kong-based fund that sought to profit on bets on securities in Asia.
Prior to starting Tiger Asia, Hwang was an equity analyst for Tiger Management according to Archegos' website. Tiger Management, run by Julian Robertson, was a hugely successful hedge fund, which returned investor money and shut in 2000.
Hwang in 2012 settled insider trading charges by the U.S. Securities and Exchange Commission according to a press release at the time. He and his firms at the time agreed to pay $44 million to settle, according to the release.
Some market participants said last week's wild moves were likely to make investors increasingly cautious.
"It's insane," said Edward Moya, senior market analyst at OANDA. "When you consider how some of these companies have skyrocketed over the last few months, there will be concerns that we are over-levered."
Other market participants said potential unwinds would only have a limited impact on broader markets. The Nasdaq Composite and S&P 500 both surged over 1% on Friday despite the sharp selloffs in Viacom and other stocks.
"These stories around fund liquidations happen from time to time," said Michael Antonelli, market strategist at Baird. "Some of the names where big blocks were traded on Friday might see some near-term volatility as traders wonder whether the selling is complete."
Mike O'Rourke, chief market strategist at JonesTrading said he expected the trades to "largely be done."
"The prime brokers made lots of noise in marketing these blocks," O'Rourke said. "They knocked the stocks down aggressively in order to get the trades done."
O'Rourke added that prime brokers typically go long the remnants of the position, and he expected most of the names involved in the block trades to be "gapping up significantly higher" in premarket trading.
In more potentially unnerving news for investors, Japan's Nomura Holdings Inc on Monday flagged a potential $2 billion loss at a U.S. subsidiary although traders were not clear whether it was related to Archegos.
A number of banks were involved in the block sales. A source familiar with the matter said on Saturday that Goldman Sachs Group Inc was involved in the large blocktrades. The Financial Times reported that Morgan Stanley sold $4billion worth of shares early on Friday, followed by another$4 billion in the afternoon.
A source familiar with the matter said Deutsche Bank was involved with the block trades as well.
Bloomberg and the Financial Times on Saturday reported thatGoldman liquidated more than $10 billion worth of stocks in the block trades.
An email to clients seen by Bloomberg News said Goldman sold $6.6 billion worth of shares of Baidu Inc , Tencent Music Entertainment Group and Vipshop Holdings Ltd, before the U.S. market opened on Friday, the Bloomberg report on Saturday said.
Following this, Goldman sold $3.9 billion worth of shares inViacomCBS Inc, Discovery Inc, Farfetch Ltd, iQIYI Inc and GSX Techedu Inc, according to the report.
(Reporting by Megan Davies, Ira Iosebashvili and Kenneth Li in New York, additional reporting by Juby Babu in Bengaluru; Editing by Paul Simao and Jane Wardell)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.