SoftBank Vision Fund posts record $27 billion loss as tech stocks plummet

SoftBank reported a record loss at its investment unit Vision Fund on Thursday, as tech stocks were hit by rising interest rates and Beijing’s regulatory crackdown hurt its China holdings.

The Japanese giant’s Vision Fund posted a loss of 3.5 trillion yen ($27.4 billion) for its fiscal year ended March 31, the biggest loss since the mutual fund began in 2017.

Vision Fund’s troubles contributed to a record annual loss of 1.7 trillion yen for the entire SoftBank group. Its shares closed 8% lower in Japan on Thursday.

SoftBank’s Vision Fund invests in high-growth stocks and is the brainchild of founder Masayoshi Son to transform the company into an investment firm.

But global markets have been in turmoil as investors grapple with rampant inflation and the US Federal Reserve’s rate hike, prompting investors to flee high-growth tech stocks.

The ongoing Russian war against Ukraine and a resurgence of Covid-19 in China and the subsequent lockdown in financial megacity Shanghai have fueled concerns about global growth and put additional pressure on markets.

Son said during an earnings presentation on Thursday that these factors have caused “confusion in the world” and in the markets, according to an official translation.

South Korean e-commerce firm Coupang, which went public in the U.S. last year and is down nearly 60% this year, was one of the companies that contributed to the Vision Fund’s loss. Singapore ride-hailing giant Grab and US delivery company Doordash were among the other weak performers in the portfolio.

SoftBank also saw writedowns on valuations of some private companies in which it invests.

Son said the company will switch to “defense mode” as a result of the headwinds. These include “stricter” criteria for new investments and a “more conservative approach to the pace of new investments”.

SoftBank has significant exposure to China through its investments in e-commerce giant Alibaba and ride-sharing company Didi.

Both companies have seen their share prices plummet due to Beijing’s sweeping crackdown on the domestic tech sector and tightening regulation in areas ranging from privacy to antitrust.

In April 2021, which falls in SoftBank’s final fiscal year, Alibaba was hit with a $2.8 billion antitrust fine. Its shares are down about 31% year-to-date.