Stock market movements on an electronic display in New York, USA.
Goldman Sachs Group Inc. liquidated $ 10.5 billion worth of block trades shares on Friday as part of an extraordinary sell-off that wiped out $ 35 billion in the value of bellwether stocks, ranging from Chinese tech giants to US media conglomerates.
The Wall Street bank owns $ 6.6 billion worth of shares of Baidu Inc., Tencent Music Entertainment Group and Vipshop Holdings Ltd. sold before opening the market in the US, according to an email to customers seen by Bloomberg News.
That move was followed by the sale of $ 3.9 billion of shares in ViacomCBS Inc., Discovery Inc., Farfetch Ltd., iQiyi Inc. and GSX Techedu Inc., the email said.
According to people familiar with the matter, more of the unrecorded stock offerings would be managed by Morgan Stanley on behalf of one or more undisclosed shareholders. Some of the transactions in individual companies exceeded $ 1 billion, based on calculations Bloomberg data show.
Maeve DuVally, a Goldman Sachs spokeswoman, declined to comment. A Morgan Stanley spokesman declined to comment.
Price fluctuations
The liquidation caused price swings for every stock involved in the high-volume trades, while some of their industry counterparts rattled. It also sparked speculation among some traders of foreclosure by a fund being liquidated.
Several major investment banks affiliated with the Tiger Cub hedge fund Archegos Capital Management LLC have liquidated holdings, contributing to the fall in ViacomCBS and Discovery stock prices, IPO Edge reported, citing people it did not identify.
In block trades, large amounts of securities are negotiated privately between parties, usually outside the open market.
Friday’s sell-off dragged companies including Alibaba Group Holding Ltd. and NetEase Inc., down. The peers later rebounded after traders said news of the offers allayed fears that broader trade was emerging across the industry.
That late recovery pushed up an index of companies dealing with internet-related businesses in China and the US, with the measure halting a three-day sell-off while the week was still down about 6.5%.
Chinese stocks were under pressure after one warning from the Securities and Exchange Commission that it is taking steps to force accounting firms to have US regulators review the financial audits of foreign companies – the penalty for non-compliance is removal from exchanges. Additionally, Bloomberg News reported that the Chinese government has proposed establishing a joint venture with local technology giants to oversee the lucrative data they collect.
Read more: ViacomCBS, Discovery Plunge on New Downgrade, Block Trades