Archegos-linked stocks show moderate gains as volatility declines


(Bloomberg) – Stocks at the center of the Archegos Capital Management crisis saw gains in pre-market trading as investors weighed whether the fallout from the forced offers should continue.

ViacomCBS Inc. was up 1.6% at 7:03 am in New York after its weeklong drop, with Discovery Inc. up 1% and Tencent Music Entertainment Group up 1.5%. U.S. certificates of deposit of Chinese companies Baidu Inc. and GSX Techedu Inc. also rose, while Vipshop Holdings Ltd. gained 4% after announcing a $ 500 million buyout.

Shares of the companies, which also include Farfetch Ltd. and Iqiyi Inc., had a few tough sessions following the forced liquidation of Archegos-related positions from Bill Hwang, with ViacomCBS down 55% last week. While investors remain worried about the potential for further liquidations, there are no signs of wider contagion yet.

“Market participants will be happy to see that this has so far been contained – although there may be other Archegos related transactions that need to be unwound,” said Neil Wilson, chief market analyst at Markets.com, by email. “The banks that remain in the bag – which appear to be Nomura and Credit Suisse more than others – will suffer significant losses.”

Shares of Credit Suisse and Nomura both extended Monday’s steep declines as lenders warned of potential “large” losses after an unidentified US hedge fund client defaulted on margin calls. Credit Suisse fell 2.2% at 12:47 p.m. in Zurich trading, bringing its decline for the week to 16%. Nomura lost another 0.7% in Tokyo, after falling 16% on Monday.

Shares valued at $ 2.64 billion changed hands in a wave of bulk trades on Monday. Five of them, worth a total of $ 2.14 billion, were executed by Wells Fargo & Co., according to a person familiar with the matter. Separately, around 20 million shares of Rocket Cos. Were sold through Morgan Stanley, people familiar with the matter said.

Break the silence

Archegos broke his silence on the matter on Monday evening.

“These are difficult times for the Archegos Capital Management family office, our partners and our employees,” said Karen Kessler, spokesperson for the company, in an emailed statement. “All plans are being discussed as Mr. Hwang and the team determine the best way forward.”

Kessler works at Evergreen Partners, which specializes in crisis communication and reputation management, according to its website.

The United States Securities and Exchange Commission has been monitoring the forced liquidation of assets linked to Archegos, a spokesperson said.

(Updates with Vipshop buyout in second paragraph, analyst commentary in fourth, bank stocks in fifth)

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