There can be few if any investment groups more exposed to Chinese tech companies than Japan’s SoftBank. Its stake in the online shopping company Alibaba still represents 39 per cent of its asset value and Chinese start-ups account for 23 per cent of its Vision Fund’s portfolio in terms of fair value.
So, it’s significant that its founder Masayoshi Son has announced SoftBank will cut its investment in Chinese start-ups until the extent of Beijing’s scrutiny of the tech sector becomes clear. In comments after a quarterly earnings release, Son said it would take a “wait-and-see stance” until the situation settled, in what he hoped would be a year or two.
However, he is still bullish on China, “I still have very high hopes,” he said on Tuesday, noting the country was still generating a profit for SoftBank, part of the ¥761.51bn ($6.9bn) in net profit it recorded in its June quarter. That was down 39 per cent on a year ago, when it benefited from the merger of the US carriers Sprint and T-Mobile, but ahead of analysts’ forecasts of a net loss of ¥11.8bn. Lex comments the only meaningful turnround in the past two years has resulted from share buybacks, rather than record profits or Son’s vision.