Hwang and his private investment firm, Archegos Capital Management, were revealed to be behind the large block trades last Friday. His secretive bets that were heavily leveraged have triggered margin calls and led to the liquidation of positions worth $40 billion.
Part of Hwang’s portfolio was traded in blocks last Friday by Morgan Stanley, Wells Fargo &Co. and Goldman Sachs Group Inc. Bankers speculate that Archego’s net capital had reached more than $10 billion. As his $40 billion disposals keep unwinding, estimates of Archegos’s total position could be worth north of $50 billion or even more than $100 billion.
His fortunes were wiped in days as some of his holdings including Baidu Inc., Discovery Inc., GSX Techdu Inc., and ViacomCBA Inc. were sold off heavily by banks in recent days.
The former partner at Goldman Sachs said, “I’ve never seen anything like this — how quiet it was, how concentrated, and how fast it disappeared.”
The financial sector was weighed down by Hwang’s losses as systematic risk has reverberated from New York to Tokyo and beyond. So how could an individual take on such massive risks through so many banks under the radar of the regulators over the world?
The answer could constitute Hwang’s family office-style set up which required limited risk oversight and then leveraged his positions in companies through financial derivatives without ever having to disclose these massive holdings. Moreover, despite a record of attempted market manipulation and insider trading that drove him out of the hedge fund business a decade ago, global banks still see him as a lucrative client.
Read more on
The market is dynamic and presents opportunities to trade. ZERO Markets is a regulated broker globally that gives its traders the confidence to trade across a broad range of asset classes including CFDs on Forex, Shares, Indices, Commodities, and Cryptocurrencies. Start trading with ZERO on tight spreads from 0.0 pips today!
DISCLAIMER: The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. Zero Markets has made every effort to ensure the accuracy of the information as at the date of publication. Zero Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, Zero Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the Zero Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from Zero Markets website,www.zeromarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. Zero Markets recommends that you seek independent advice. DISCLAIMER: ZERO Financial Pty Ltd (ZERO MARKETS, ABN 72 623 051 641) is an Authorised Representative (no: 001273819) of First Prudential Markets Pty Ltd (ABN 16 112 600 281, AFSL 286354).