Masayoshi Son, founder of Softbank, said there was “confusion in the world and in the market” due to a number of factors, including Russia’s aggression in Ukraine, high inflation and the central bank raising interest rates. These factors have contributed to the record annual loss in Softbank’s Vision Fund.
Kentaro Takahashi | Bloomberg | Getty Images
Softbank on Thursday reported record losses in its Vision Fund investment unit, as technology stocks have been hit by rising interest rates and Beijing’s regulatory crackdown has hurt its holdings in China.
The Japanese giant’s Vision Fund posted a loss of 3.5 trillion yen ($ 27.4 billion) in the fiscal year ended March 31, the biggest loss since the investment fund began in 2017.
The plight of Vision Fund contributed to a record 1.7 trillion yen annual loss for the entire Softbank Group. Shares of Japan closed down 8% on Thursday.
SoftBank’s Vision Fund invests in high-growth stocks and is the brainchild of the son of founder Masayoshi as a way to reinstate the company into an investment firm.
But global markets have been volatile as investors have been battling massive inflation and the US Federal Reserve has raised interest rates, forcing investors to flee high-growth technology stocks.
The ongoing Russian war on Ukraine and the resurgence of Kovid-19 in China and the subsequent lockdown of financial mega-city Shanghai have raised concerns about global growth and added to the pressure on markets.
During an earnings presentation on Thursday, the son said these factors had caused “confusion in the world and in the market,” according to an official translation.
Kupang, a South Korean e-commerce firm that went public in the United States last year and has lost nearly 60% this year, was one of the companies contributing to the loss of Vision Fund. Singapore’s ride-hailing giant Grab and US delivery firm Dordash were among the other detrimental performers on the portfolio.
SoftBank has written-down records in valuations for some of the private companies in which it invests.
The boy says the headwind will cause the company to go into “defense” mode. This will include having “strict” criteria for new investments and being more “conservative” in the pace of new investments.
China’s investment has declined
China has a heavy exposure through investments in Softbank’s e-commerce giant Alibaba and ride-hailing company Didi.
Both companies have seen sharp declines in their share prices due to Beijing’s massive crackdown on domestic technology and tight controls in areas ranging from data protection to mistrust.
In April 2021, which fell in Softbank’s last fiscal year, Alibaba was fined $ 2.8 billion in antitrust. Its shares have fallen about 31% year-over-year.