TOKYO, Nov 14 (Portal) – Shares in Japan’s SoftBank Group Corp (9984.T) slumped on Monday after the company reported a third consecutive quarter of heavy losses at its investment arm Vision Fund.
Shares are down 13% in early afternoon trading, heading for their biggest one-day loss in more than two-and-a-half years.
But analysts said the stock price drop was partly a pullback after a steep rally fueled by hopes of more share buybacks. As of Friday’s close, SoftBank shares were up more than 40% since October.
“Various expectations, including another round of share buybacks, had pushed their share prices higher and now they are in an adjustment period,” 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 stock.
Jefferies analyst Atul Goyal said in a note to clients, “We looked for another round of buyback announcements, but there were none.”
Market specialists said worries about weakness in technology stocks are another factor weighing on shares of SoftBank, which is heavily reliant on growth in high-tech companies.
“The outlook for IT (information technology) companies is bleak given the slowing global economy,” said Shigetoshi Kamada, general manager of research at Tachibana Securities.
“SoftBank Group’s growth expectations have fallen amid concerns that the value of its portfolio companies may not grow in this environment.”
The Vision Fund recorded investment losses of 1.38 trillion yen ($9.9 billion) in the three months ended September 30 as the value of its portfolio continued to decline. Continue reading
But SoftBank as a whole reported its first quarterly profit in three quarters, helped by reducing some of its holding in China’s Alibaba Group Holdings (9988.HK).
SoftBank’s shares are still up 11% year-to-date, far outperforming the tech-heavy Nasdaq (.IXIC)’s 27.6% decline 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
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