TOKYO (Reuters) – Shares in Japan’s SoftBank Group (9984.T) It fell on Monday after the company reported a massive loss in its investment arm Vision Fund for the third consecutive quarter.
Shares fell 13% in early afternoon trade — heading for their biggest one-day loss in more than two and a half years.
However, analysts said the drop in the share price was partly a reversal of a sharp rally that was driven by hopes of more share buybacks. As of Friday’s close, SoftBank shares are up more than 40% since October.
“Different expectations, including another round of share buybacks, pushed their share prices higher and now they are in the process of adjusting,” said Shinji Moriuki, an analyst at SBI Securities.
Just a day before the quarterly results on Friday, SoftBank announced the completion of its plan to spend 400 billion yen ($2.88 billion) to buy back its shares.
“We were looking for another round of buyback announcement, but there hasn’t been any,” Jefferies analyst Atul Goyal said in a note to clients.
Market specialists said concerns about weak technology stocks are another factor weighing on stocks in SoftBank, which is betting heavily on the growth of high-tech companies.
“The outlook for IT (information technology) companies is bleak amid the global economic slowdown,” said Shigetoshi Kamada, general manager of research at Tachibana Securities.
“The expectations for the SoftBank Group’s growth have diminished due to concerns that the value of its portfolio companies may not grow in this environment.”
Vision Fund posted an investment loss of 1.38 trillion yen ($9.9 billion) in the three months to September 30 as the value of its portfolio continued to decline. Read more
But SoftBank as a whole reported its first quarterly profit in three quarters, buoyed by reducing some of its stake in Chinese holding group Alibaba Group. (9988.HK).
SoftBank shares were still up 11% from the start of the year, significantly outperforming the tech-heavy Nasdaq. (nineteenth) 27.6% decline and the Nikkei index declines (.N225) 2.6% decline.
(1 dollar = 138.9900 yen)
Additional reporting by Kiyoshi Takenaka and Junko Fujita; Editing by David Dolan and Edwina Gibbs
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