Block-Trade Bevy Wipes $35 Billion Off Stock Values in a Day
Dow Jones stock index hit by record falls. Image used for representational purposes.

Block-Trade Bevy Wipes $35 Billion Off Stock Values in a Day

An extraordinary spree of block trades on Friday erased $35 billion from the values of bellwether stocks ranging from Chinese technology giants to U.S. media companies.

The unregistered stock offerings were said to be managed by banks including Goldman Sachs Group Inc. and Morgan Stanley, according to people familiar with the matter, on behalf of one or more undisclosed shareholders. Some of the trades exceeded $1 billion in individual companies, calculations based on Bloomberg data show.

The liquidation triggered price swings for every stock involved in the high-volume transactions, while rattling some of their industry counterparts. It also spurred speculation among some traders of forced selling by a fund being liquidated.

A spokesperson for Morgan Stanley declined to comment. Goldman Sachs did not respond to a requests seeking comment.

Among the affected stocks were Chinese giants such as Baidu Inc., Tencent Music Entertainment Group and Vipshop Holdings Ltd. Two North American media companies, ViacomCBS Inc. and Discovery Inc. were also hit particularly hard.

Several major investment banks with ties to Tiger Cub hedge fund Archegos Capital Management LLC liquidated holdings, contributing to the slump in share prices of ViacomCBS and Discovery, IPO Edge reported, citing people it didn’t identify.

In block trades, large volumes of securities are privately negotiated between parties, usually outside of open market.

Block-Trade Bevy Wipes $35 Billion Off Stock Values in a Day

The Chinese ADRs whipsawed throughout the day as more blocks were said to be offered in Iqiyi Inc. and GSX Techedu Inc. The morning selloff dragged peers including Alibaba Group Holding Ltd. and NetEase Inc. lower. The peers later recovered after traders said word of the offerings lessened fears that a broader trade was unfolding throughout the sector.

That late rebound pushed up an index of companies engaged in internet-related businesses in China and the U.S. on Friday, with the measure halting a three-day selloff while still notching a slide of about 6.5% for the week.

Chinese stocks have been under pressure after a warning from the Securities and Exchange Commission that it’s taking steps to force accounting firms to let U.S. regulators review the financial audits of overseas companies -- the penalty for non-compliance being ejection from exchanges. In addition to that, Bloomberg News reported that China’s government has proposed forming a joint venture with local technology giants that would oversee the lucrative data they collect.

Goldman Sachs and Morgan Stanley also managed block trades that included ViacomCBS, Discovery, Farfetch Ltd and Shopify Inc., people familiar with the matter said. Some of those shares were stung multiple times, with Discovery being the subject of at least three block trades. ViacomCBS and Discovery, which were already under pressure from a slew of analyst downgrades, posted their biggest one-day drops ever.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.