Investment groups that register unrealised gains as profits should do so gingerly. If they make big mark-ups when markets are roaring, it may amplify write-offs when the asset cycle turns.
SoftBank epitomises the problem. The Japanese tech investment group has booked an investment loss of ¥2.3tn ($17bn) at its Vision Funds for the first quarter. The funds, whose backers include Saudi Arabia, are belying their ambitious name. This latest wipeout of value follows a record annual loss. The tech stock rout is to blame.
The same applies to SoftBank’s own Y3.16tn ($23bn) attributable net loss in the latest quarter. Value ebbed from Chinese artificial intelligence company SenseTime and Norwegian robotics firm AutoStore. That compounded losses from companies such as South Korean ecommerce platform Coupang, down 60 per cent since it listed last year