Background of the Incident
On March 29, several banks, including Nomura and Credit Suisse, issued loss warnings, causing their stock prices to plummet. Nomura stated that due to a transaction by an American client, they might face significant losses. Nomura's statement about the 'American client' confirmed the rumors that shook Wall Street last Friday: 'Bill Hwang's margin call.' Archegos, the large fund managed by legendary capital tycoon Bill Hwang, faced forced liquidation of its heavily weighted stocks, triggering a 'chain reaction plunge' in other major holdings, including several Chinese concept stocks being severely battered. This margin call event set the 'record for the largest single-day loss in human history.'
Market Impact
Last Friday, several US-listed Chinese stocks experienced 'panic-driven' plunges due to the forced liquidation of Archegos Capital, a fund under Bill Hwang. Following three consecutive days of heavy losses for Chinese stocks, shares of iQIYI, Tencent Music, Vipshop, and GSX Techedu all dropped by more than 30%.
On Monday, most 'concept stocks' affected by the margin call continued their downward trend, with Vipshop falling another 8.72%, and GSX Techedu plunging 18.53%. Meanwhile, Nomura Holdings and Credit Suisse, impacted by this black swan event, plummeted over 10%, dragging down international banks collectively.
During pre-market trading on Tuesday (as of 16:00), stocks affected by Archegos’ margin call showed slight gains. GSX Techedu (GSX.N) rose 2.4%, and Tencent Music (TME.N) increased by 0.8%.
Fellow Investor Discusses Hot Topics