It’s been revealed that Goldman Sachs was the broker behind an extraordinary block trading spree which resulted in around US$35 billion dollars being wiped from the value of several Chinese tech giants, as well as US media stocks.
According to a report by Bloomberg, an email from Goldman Sachs to clients detailed the trades which included the sale of US$6.6 billion of shares of Baidu Inc, Tencent Music Entertainment Group and Vipshop Holdings. That was followed by the sale of US$3.9 billion of shares in ViacomCBS, Discovery, Farfetch Ltd, iQiyi and GSX Techedu.
While Goldman Sachs has been named as prime broker of the trades and Morgan Stanley reported to have managed the stock offerings, the identity of seller or sellers remains unknown.
The Chinese Tech stocks hardest hit by the trades throughout the week included:
- GSX Techedu (NYSE:GSX) -55%
- iQiyi Inc (NASDAQ:IQ) -37%
- Tencent Music (NYSE:TME) -34%
- Vipshop Holdings (NYSE:VIPS) -31%
- Baidu (NADAQ:BIDU) -20%
The sell-off also dragged down other Chinese tech stocks not directly involved with the block trades.
“A classic case study where sentiment & order flows will always be the main drivers of price actions, the news flow narrative (risk of delisting from US stock exchanges – not a sudden news flow) tends to be secondary in nature,” wrote CMC Markets analyst, Kelvin Wong, on Twitter.
Michel Keusch, portfolio manager at Bellevue Asset Management AG, told Bloomberg he’s “never seen something of this magnitude” in his 25-year career.
A mysterious onslaught of block trades wiped out $35B in value yesterday. It was a lot of Chinese ADRs and some US comms too pic.twitter.com/lYDIfsBd2J
— Dani Burger (@daniburgz) March 27, 2021
Now the verdict is out, that’s the main reason why several China Big Tech stocks such as Baidu, IQIYI, Tencent Music & Tencent took a significant plunge this week. Prime brokers margin call from a prominent Tiger Cub related family office due to leverage https://t.co/LYxsAtbyaP
— Kelvin Wong, CFTe (@KelvinSCWong) March 28, 2021