Recently, we originally thought that the plunge of US stocks last Friday's Chinese stock was a simple individual phenomenon, but no one expected that this incident became a black swan that triggered the entire world financial market. Recently, many well-known international investment banks exposed the news of storm. What's going on? Can financial tycoons become black swans even if they lose their positions?
1. Financial tycoons have lost their positions
According to the daily economic news, recently, a Korean man used a Japanese brokerage to trade Chinese stocks in the American stock market. This person is Bill Hwang, who created the record of "the largest single-day loss in human history." The latest news is that in the early trading of US stocks on Monday, US stocks are monitoring the status of Archegos funds.
Last Friday (March 26), US media reported that Archegos Capital, a high-leverage fund managed by hedge fund manager Bill Hwang (Korean), lost its holdings, and its heavily held stocks include Viacom (VIAC), DISCA, GSX, Tencent Music , Baidu, Wuxin Technology, etc. The total amount of shares held by the fund was sold last week reached US$19 billion. Due to the high leverage, the market value of the related stocks evaporated by US$33 billion, or approximately RMB 215.9 billion. Among them, Goldman Sachs sold $10.5 billion, while Morgan Stanley sold more than $8 billion.
On Monday (March 29), Nomura Holdings, Japan's largest securities company, said that its U.S. subsidiary may have suffered "significant" losses due to a deal with a U.S. client. Based on market prices ended on March 26, the subsidiary's claim amount against its customers is estimated to be approximately US$2 billion (about RMB 13 billion). On the same day, the Daily Economic News learned that Swiss financial regulator FINMA said on Monday that it had received a notice from Credit Suisse (Credit Suisse) that it had participated in an international hedge fund incident involving multiple banks.
2. Lehman Brothers style black swan is coming?
No one expected that a thunder would trigger such a major event. So what should we think about this?
First of all, the biggest problem in finance is high leverage. We see that due to Archegos' liquidation, two North American media stocks ViacomCBS and Discovery, which plummeted last Friday, closed down more than 6% and 1% respectively. Chinese stocks listed in Vipshop fell by more than 8%, iQiyi fell by more than 5%, and GSX, which closed down more than 41% last Friday, fell by more than 18%, and has fallen by nearly 70% this month, Baidu fell by nearly 2%, and Tencent Music rose by more than 1%. Why can a storm cause such a phenomenon? This is because the total amount of US$19 billion sold directly leverages by leverage, which is about 4 times the amount, which is close to US$80 billion. In this case, such a large-scale short selling will pose huge risks to any listed company at present. At least many listed companies have not had such a high trading volume. Therefore, after such a high selling order, it is also thanks to the US stock market that does not have the limit-down system for . Otherwise, according to China's gameplay, it is to directly block the limit-down and not give any other opportunities to any opponent.
Secondly, the financial superposition effect may be very strong. Although there was an institutional problem this time, this company called Archegos is a company that is very familiar with financial market operations. Such a serious problem this time is definitely not the financial risk events we have seen in a short period of time. It is extremely likely that there will be a large number of financial hedging methods in the future, similar to the credit default swap in 2008. If there are a large number of similar products behind this time, it is very likely that the collapse is only the first step, and there will be large-scale situations in the future.
Third, if a large-scale financial institution goes bankrupt, it is indeed very likely to cause an incident similar to Lehman Brothers. This is because for most financial institutions, whether it is the recent Nomura Securities or Credit Suisse , they are all behemoths in the entire capital market. Once anyone has a problem, it is very likely to trigger the effect of a financial tsunami, which is the source of the possibility of an accident.
At present, we must be careful and guard against the spread of financial risks. This is the most critical thing.
