Monday 29 March 2021

Tech IPO's flounder and hedge fund collapse

 Slight warning signs for a Monday morning. 

The Deliveroo IPO has been trading at the bottom of its range. Not the 100% upsides we see in the US over the past year or two when high profile tech companies float. 

Meanwhile in China, Bilibili - a kind of China YouTube behind the Great FireWall, has debuted below its offer price too and is falling further as the day goes on. 

So definitely some wobbles in the market for insanity that we have seen for so long. Of course, these might be caused by the furore that a Chinese Hedge Fund, Tiger Asia, blew up using excess leverage last week and promptly had to face a margin call for  a mere $20 billion to pay its way. It blew up because it was using very high risk strategies to try and make a return (and the guy who runs it is, er, interesting with several charges against him for insider trading etc over the years).

All in all a propitious start to the week!

16 comments:

dearieme said...

No one can tell just which event will blow up the equity markets. Sometimes, though, you get notice. Northern Rock springs to mind.

andrew said...


I suspect a lot of that fantasy (QE / Stimmie etc) money that has been handed out over the last few years has been used to buy things that will soon be worth a lot less than they are now.

I suspect some smart people are moving to cash (for every buyer there is a seller), wonder who they are - will chinese BTC multi-billionares become USD multi-billionares?

Nick Drew said...

A whole 10 days before Northern Rock, this blog brought you ...

http://www.cityunslicker.co.uk/2007/09/schadenfreude.html

never say you weren't warned! (I know you wouldn't)

Bill Quango MP said...

Deliveroo is probably because of the Uber ruling. Deliveroo are next in line to be made to treat their employees, as employees.
Adding an 11% N.I. Bill. Plus, pension contributions, sick pay, holiday pay, complaints and grievances, equal pay legislation, equality and transgender rights and every other costly and time consuming piece of workplace rights drag that nimble gig companies never usually have to face.

Matt said...

Cut the regulations on all companies. Cut immigration. Stoke the economy and give workers the upper hand by having companies compete for labour rather than the other way around.

James Higham said...

Could the word volatile be used?

Anonymous said...

Matt is correct. Real median male wages are still below 1997 levels, real energy prices up, real housing prices near doubled.So the median male is a lot poorer in real terms.

Real GDP is up 50% since 1997. Who are the beneficiaries?

CityUnslicker said...

Matt - Immigration is no longer a problem, one of the many benefits of Brexit quietly hidden. Indeed, much handwringing as unneeded no-skill workers have left the country in their droves to go back to Eastern Europe.

Nick Drew said...

James: to-the-point as ever!

Volatility can be compared with friction: no friction = no traction**. But there is certainly the clear possibility of Too Much Friction.

** switching idioms: no volatility = no pulse = dead. But there's definitely such a thing as too high a heart-rate ...

Matt said...

@ CityUnslicker

Not just unskilled / no-skill imported labour from Eastern Europe that can be cut. IT has had pretty flat wages over the last 20 years as well because we import lots of people from South-East Asia into these roles.

Timbo614 said...


Is Archegoes your first domino CU?
Looking like the same high leverage positions with multiple banks, failed when unable to meet a margin call. A prescient post.

Timbo614 said...

Oopps too early for Timbo's typing Archegos of course.

Graeme said...

At least you didn't accidentally type Archewell

Graeme said...

Just wondering if the regulators in the big financial centres have an overview of these heavily leveraged positions? The fact that Archegos seems to have had similar positions with a number of banks must be a major source of risk to the financial centre looked at as a whole, if there were no equal and opposite strategies being run. Does anyone know? Does anyone watch this?

Anonymous said...

"unneeded no-skill workers have left the country in their droves to go back to Eastern Europe"

Not so much in my Midlands neck of the woods. Half the High Street may have vanished, but not the Polish and Balkan shops, nor the Polish delivery drivers.

The only real proof will be if wages start rising.

(btw anyone know what the benefits rules are here re ongoing claims? In Iceland a nnumber of Covid cases have been found in EE nationals returning to Iceland purely to "sign on" for benefits, presumably still maintaining an Iceland mail address. Can unemployed Poles go home and still get benefits?)

Anonymous said...

Can unemployed Poles go home and still get benefits?

For up to 28 days without sanction. But they are more likely to be employed, on furlough and in Poland. During the initial wave, there was no DWP work search commitment but that has now changed.

You'll find that the "work-shy" are usually those with long term health issues or family commitments that means they are on zero hours contracts. A lot of benefits are paid to people who are in work rather than unemployed such is the structure of our benefits system which, in effect, are indirect subsidies to employers.

With the reduction in EE workers and the absence of a pool of workers of differing abilities, there is likely to be a growth in wage inflation.

Whether that will manifest itself in a cost to the employer or a cost to the Government through benefits, is not yet clear. But given the amount of cash being handed out by Boris, you can judge for yourself.