Japan‘s biggest brokerage and investment bank, Nomura Holdings Inc, signs on a possibility of a grand loss. On Monday, the company predicts around $2 billion loss in its U.S. subsidiary. Due to this, Nomura Holdings might suffer from a heft bond issuance and tumbling stocks.
Nomura Holdings stocks plummets
Nomura Holdings put out a statement to address the issue. The firm suggests that transactions involving a US client might have caused the $2 billion hit. Nomura further assured that the situation might still change, depending on the unwinding of the transactions and market fluctuation.
The statement from Nomura is not a mere excuse. Investors have been relating the drops in the numeral companies’ stock prices drop on a series of block trades in the United States that had been going on since Friday. A source from Reuters said that Archegos Capital Management’s holdings sales were related to the trades.
Just last month, Nomura announced its anticipation great achievements. The Japanese firm was positive on sustaining high earnings after booking a 23% on-year rise in April-December net profit at 308.5 billion yen ($2.82 billion). The record was reported as the best third quarter in 15 year on solid global markets and investment banking.
Nomura’s performance has been in the green through its US business’ push. Investment banking, equity and bond trading were all included in the US business.
Accordingly, a flood of sell orders at market open hit Nomura in early trade. The occurrence pushed its price down as much 16%, Reuters report.
Meanwhile, Reuters couldn’t get an answer from Archegos’ New York Office yet. Nomura, on the other hand, wouldn’t disclose its relationship with Archegos.
Nomura reorganize future plans
To adjust with the situation, Nomura had to come up with reorganizations on its plans. According to Reuters, the firm will be assessing the impact of the potential loss upon its consolidated earnings for the year ending March 31, which originally scheduled for release on April 27. Additionally, Nomura will most likely cancel the planned issuance of $3.25 billion in senior notes.
On a research memo, Jefferies analysts wrote, “As long as these losses are one-off in nature, 1H FY3/22 should be the timing of recovery, thus the impact on the longer-term outlook is relatively limited”.
Accordingly, Chief Cabinet Secretary Katsunobu Kato said the government would take part in monitoring the situation carefully. The Financial Services Agency would share information on the matter with the Bank of Japan.
Read also: Japan is Asia’s Top Stock Market in 2021
Follow and join us on Youtube, Instagram, Facebook, and Twitter to be part of the trader community in Asia
