— This is the script of CNBC's news report for China's CCTV on September 8, 2020, Tuesday.
The report on the Nasdaq whale immediately became one of the hottest topics in financial markets in recent days, and investors were quick to react. In Monday's trading, Japan's SoftBank Corp. dropped by nearly 7.2%. This is the largest one-day decline the company has faced since March of this year. The company's market value has evaporated by 946 billion yen in one day, equivalent to approximately $8.9 billion.
The fall in SoftBank shares, the second most heavily weighted stock in the Nikkei 225, also dragged the index down 0.5 per cent. Retail investors with little knowledge of options trading have reacted particularly negatively to the Nasdak report, according to the Financial Times. Retail investors account for about 30 per cent of SoftBank's registered shareholders. SoftBank's fall was triggered by media reports, but even before that, strategists at Nomura had warned that institutional investors returning from holiday would sell some of their overvalued stocks, leading to a sell-off in technology stocks in Tokyo in early September.
Back to the impact of SoftBank options trading on U.S. stocks. Many believe this contributed to the broader U.S. stock bubble, but the options experts we spoke with today don't think SoftBank has had a particularly big impact. They are buying options for a month or several months, while ultra-short-term options traded by a wider range of retail investors, such as a week or even a day, may be a bigger driver of the bubble. He also worries that these retail investors, who trade options, could suffer huge losses from the rapid decline in the stock market.
DANIEL KIRSCH
CORNERSTONE MACRO, CO-HEAD OF TRADING
right now, in a bull market, everyone looks very smart, if we get any sort of dry, similar to last thursday or any meaningful pull back, you lose a lot of money very fast, and a lot of option trading we are seeing concentrated within one week, if you dont rally fast enough, the option premium will vibrate you could lose a lot of money very quickly
The so-called big five now account for 20% of the entire U.S. stock market and 12% of the MSCI World Index, and in recent interviews we've noticed the term bubble coming up more and more.
Jonathan Bell
chief investment officer at Stanhope Capita
i think we're certainly in in bubble territory XXXX (小头画面)but it doesn't mean that it's going to deflate uh now that what we've seen in the last week or so is only an unwinding of the the rise of the previous two weeks um there's still a lot of reasons to own these but be really careful trim holdings
Institutional investors are already wary of a bubble.
Ed Yardeni who has long been bullish on the U.S. stock market also warned of a pullback. He thinks U.S. stocks could fall another 10 to 15 percent, and that the correction could be done quickly in days rather than weeks or months. But he also noted that the correction is healthy and that he is still on the long side. He thinks the S&P 500 could rise to 3,800 next year. In 1996, Alan Greenspan, then chairman of the Federal Reserve, raised the irrational exuberance in the stock market in a public speech. But stocks continued to rise for some time before the dotcom bubble burst few years later. Ironically, Greenspan's speech was seen as a warning that the bubble was about to burst
History is always very similar. When will this bubble burst? We need to wait and see.