(Bloomberg) – Shares linked to the Archegos Capital Management crisis erupted on Tuesday after Credit Suisse Group AG hit the market with block transactions totaling more than $ 2 billion, the last mass sale of shares as part of consequences of the liquidation of Bill Hwang’s fund.
ViacomCBS Inc. erased an initial loss to gain up to 2.5%, Vipshop Holdings Ltd. rose up to 5.2% and Farfetch Ltd. added 2.1% on Tuesday after the Swiss bank divested its shares . All three companies jumped after falling into the pre-market trade.
Credit Suisse fell by 0.6% in US trades after rising earlier in Zurich, even after the bank said it would take a 4.4 billion franc ($ 4.7 billion) downturn linked to the implosion of the Archegos. The S&P 500 index changed little on Tuesday morning.
The shares of companies involved in previous block deals, totaling more than $ 20 billion, were in a difficult situation after Hwang and his private investment firm became the center of one of the biggest margin calls of all time. A basket of similarly weighted stocks linked to the fund has dropped about 33% since it peaked on March 22, according to data compiled by Bloomberg.
“The aftermath of the Archegos Capital collapse appears to be more expensive,” said Edward Moya, senior market analyst at Oanda Corp. “First-rate brokers will have to deal with more regulatory reviews and more transparency may be required to prevent family offices from circumventing federal security laws. The worst of the Archegos Capital explosion must be behind us. “
The cascade of trade losses reverberated from New York to Zurich and Tokyo and beyond, as banks accounted for their exposure to the massive split in Archegos’ leveraged stock bets. Last month, giant block deals were initiated by Goldman Sachs Group Inc. and Morgan Stanley after Archegos was unable to respond to margin calls. This left Nomura Holdings Inc. and Credit Suisse facing potentially significant losses.
About 34 million ViacomCBS shares were offered on Monday, 14 million Vipshop shares and 11 million Farfetch shares. This is only a fraction of the size negotiated by banks at the end of March.
(Updates with Tuesday’s trading after the market opened.)
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