SoftBank shares slide after massive WeWork bailout
Posted October 22, 2019 10:31 p.m. EDT
Updated October 23, 2019 3:47 a.m. EDT
CNN — Shares in SoftBank fell 2.5% on Wednesday after the Japanese conglomerate confirmed a massive deal to bail out WeWork, the embattled office space startup.
The deal will give SoftBank up to 80% ownership of the beleagured startup. The Japanese company is pumping $5 billion into The We Company and accelerating a $1.5 billion equity investment originally due next year. It's also offering to buy up to $3 billion worth of stock from existing investors and shareholders.
Asian markets were broadly weaker, too.
Hong Kong's Hang Seng Index fell by nearly 0.9% after the city's government said it was having to inject more cash into the local economy to ease the blow from recent protests.
South Korea's Kospi and China's Shanghai Composite Index each lost 0.4%.
Japan's Nikkei 225 closed up 0.3% after trading lower earlier in the day. Japanese markets were closed Tuesday for a holiday.
The subdued mood from investors followed a down day on Wall Street. All three major US indexes closed lower overnight as a handful of big corporate earnings disappointed. Investors are also looking out for the latest developments on Brexit after UK lawmakers demanded more time to scrutinize a withdrawal agreement negotiated with the European Union.
"We are expecting a quiet flat-to-slightly lower day as Asia prefers to take its cues from other markets this week," wrote Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, in a research note Wednesday.
The International Monetary Fund cut its forecasts for Asia's economic growth to 5% for 2019 and 5.1% for 2020 from 5.4% for both years. The organization cited a number of risks, including the potential for the relationship between the United States and China to deteriorate even more, a faster-than-expected slowdown in China and rising geopolitical tensions.
The Hong Kong government announced Tuesday afternoon that it would inject another 2 billion Hong Kong dollars ($255 million) into the economy, which has taken a hit from months of mass protests, China's slowdown and the trade war.
"Over the past few months, local social unrest has not only damaged Hong Kong's image as a safe city and an international financial, commercial, trade and aviation hub, but also hit the local economy hard," the government wrote in a press release announcing the stimulus measures. "Retail, catering, transport and tourism sectors have suffered a heavy blow."
Futures for the Dow, S&P 500 and Nasdaq continued to drop Wednesday during early Asian trading hours.