Seems like we know nothing about really vast and fast liquidations of assets; or at least, we didn’t know before last Friday. Goldman Sachs and Morgan Stanley managed to surprise the stock market as if demonstrating that there’s nothing impossible. What happened? Why? What did it lead to? This is just a part of questions asked by traders. Let’s find out together.
Goldman Sachs sold stocks for $10.5 billion overnight
According to Bloomberg, on March 26th, one of the world’s largest investment banks Goldman Sachs closed package trades for $6.6 billion on pre-market. Shares of such Chinese IT giants as Tencent Music Entertainment Group, Baidu, and Vipshop Holdings were sold.
When the trading session started, the bank kept getting rid of Chinese assets. Package trades touched upon GSX Techedu and iQiyi. Later the bank sold the shares of American media groups – Discovery Communications and ViacomCBS – and a British-Portugal company Farfetch. The overall sum of trades amounted to $3.9 billion.
Morgan Stanley liquidated assets for $8 billion
According to the Financial Times, on Friday, an American financial conglomerate Morgan Stanley joined the vast and unexpected sale initiated by Goldman Sachs. It sold shares for $8 billion overnight.
Bloomberg notes that Morgan Stanley stood behind the majority of package trades by Goldman Sachs. The financial giants abstain from any comments, including about the investors the interests of which they represented.
What does Archegos Capital Management have to do with it?
According to CNBC and IPO Edge, that in such an emergency and massive way, the banks liquidated the assets of a family investment office Archegos Capital Management founded by Bill Hwang in 2013.
Forbes mentions such a curious fact: in the EDGAR (Electronic Data Gathering, Analysis and Retrieval) database used by the SEC, information about Archegos Capital Management is virtually lacking.
Mind that being a family office, Archegos was allowed not to provide reports and data to the SEC. Meanwhile, in 2012, mister Hwang was accused of insider trading and market manipulations and fined by the SEC for $44 million.
The sale pulled the market down
According to Forbes, the traded stocks dropped by $35 billion totally. The deepest slumps were experienced by the following shares:
- GSX Techedu (NYSE:GSX) – by 41.56%, from 66.75 to 39.01 USD.
- Discovery (NASDAQ:DISCA) – by 27.45%, from 57.75 to 41.9 USD.
- ViacomCBS (NASDAQ:VIAC) – by 27.31%, from 66.35 to 48.23 USD.
- iQiyi (NASDAQ:IQ) – by 13.20%, from 20.08 to 17.43 USD.
On March 26th, Morgan Stanley and Goldman Sachs sold stocks owned y the mysterious Archegos Capital Management. The total cost was almost $19 billion. The liquidation provoked a market slump and falling of the stock price of Chinese IT giants and American media holdings by $35 billion total.
Why did such authoritative financial organizations managed the assets of such a dubious family office? Will regulators put responsibility on anyone? How come that a man fined for insider trading and market manipulations legally provided his data to the SEC?
These are, indeed, important questions, aren’t they? Many analysts are asking them after such an astonishing sale. Unfortunately, there are no answers yet.
What else to read about Morgan Stanley and Goldman Sachs on R Blog?
- Financial Reports of JPMorgan, Citigroup, Wells Fargo, Bank of America, and Morgan Stanley
- One Day After IPO: Coursera Shares Have Grown by 22%
- Consequences of Sale: Shares of Major Banks Fall, SEC Initiates Investigation
- The Bank of America: Oil Prices Will Reach 100 USD per Barrel