SoftBank will cut its investment in China until the technology industry calms down

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SoftBank Group Company Update

SoftBank founder Sun Zhengyi said on Tuesday that SoftBank will cut its investment in Chinese start-ups before Beijing’s censorship of the technology industry becomes clear.

Sun Zhengyi said that the Japanese investment group will adopt a “wait-and-see attitude” until the situation stabilizes within a year or two that he hopes.

Sun Zhengyi said, “I still have high expectations for China,” and pointed out that SoftBank’s overall investment portfolio in China is still generating profits.

“But we will remain cautious until we can judge the depth and extent of the regulations… We hope to actively resume investment when the situation becomes clear.”

SoftBank has a large exposure to China. Its stake in online shopping company Alibaba still accounts for 39% of its asset value, and Chinese start-ups account for 23% of the Vision Fund’s portfolio at fair value.

But since April, Sun Zhengyi stated that only 11% of his new investment was in China.

In an interview, the chief financial officer of the SoftBank Vision Fund also told the Financial Times that he remained optimistic about China’s long-term prospects. “Our investment thesis regarding China remains the same,” Navneet Govil said. “In the end, China will have a lot of innovation.”

When Sun Zhengyi delivered a speech, SoftBank announced a 39% drop in net profit to 761.51 billion yen (US$6.9 billion). But in the same period last year, boosted by the sale of shares in US carrier T-Mobile after the merger of SoftBank and Sprint, the quarterly profit data was higher than analysts’ expected net loss of 11.8 billion yen, according to Standard & Poor’s global market intelligence.

In addition to trying to clarify his company’s investment attitude towards emerging risks surrounding China’s technology, Sun Zhengyi also used the performance announcement to redefine SoftBank now as a representative of a company.

He said that SoftBank should be understood as a “vision capitalist”, a company that “creates revolution”. He added that, according to his calculations, since 2017, SoftBank’s investment in unlisted artificial intelligence companies accounted for about 10% of the total funds raised by such companies worldwide.

A long-term investor in SoftBank recently reduced his position due to China’s tightening technology regulations. Business.

“I think this idea of’vision capitalism’ is a fair way of expression, but it still doesn’t really answer key questions, such as how serious is China’s current threat to this business,” said shareholders.

The second US$40 billion Vision Fund is a sequel to the US$100 billion fund supported by Saudi Arabia, which will continue to increase investment within three months. It invested $14.2 billion in 47 start-ups.

The listing of seven companies, including ride-hailing app Didi and Chinese commercial freight company Full Truck Alliance, brought unrealized quarterly earnings of US$5.8 billion to the Vision Fund division.But most of them Has been wiped out Due to regulatory pressure in China, since July.

Since Didi went public in New York at the end of June, its share price has fallen by a third. Since its initial public offering in the United States on June 23, Full Truck Alliance’s share price has fallen 37%. Zuoyebang, an online education startup, has also been hit by China’s strict restrictions on the family counseling industry.

The group also reduced its investment in publicly traded US technology stocks, mainly through its asset management arm SB Northstar, and sold its shares in Microsoft, Facebook and Alphabet. As of the end of June, the group’s investment in listed stocks fell from US$20 billion in the previous quarter to US$13.6 billion, although the group reported a gain of 210 billion yen from such transactions.

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