Multi-billion sell-off on Wall Street
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Investment banks Nomura and Credit Suisse face billions of dollars in losses after U.S. hedge fund Archegos Capital defaulted on margin calls for more collateral – triggering a $20 billion fire sale
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Company founded by former hedge fund manager Sung Kook “Bill” Hwang

Archegos has family office status to manage private wealth of Hwang

It is exempt from rules designed to protect investors in hedge funds

1. Archegos acts as hedge fund and borrows money from banks to invest – process known
as margin trading. Money is used to buy stocks that are held by banks

2. Margin call: If trades made on margin turn sour, banks ask client to put up more money as collateral

3. Archegos faces margin calls but fails to provide extra cash

4. Fire sale: Banks start selling off stocks held on behalf of Archegos
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Archegos portfolio (fall in share price from Mar 23 to Mar 26)

Baidu           
$267.15
$174.05
-34.8%

Tencent Music
$32.20
$16.31
-49.3%

Vipshop Holdings
$45.45
$24.98
-45.0%

Farfetch
$61.47 
$41.25
-32.9%

iQIYI
$28.97
$14.60
-49.6%

Viacom CBS
$96.34
$39.81
-58.7%

Discovery Inc.
$72.42
$34.60
-52.2%

GSX  Techedu
$83.57
$29.40
-64.8%
           
              
Credit Suisse: Losses could reach $3bn-$5bn
Nomura: Facing $2bn in estimated losses
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Sources: Bloomberg, Financial Times Picture: Faith & Work/YouTube © GRAPHIC NEWS