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SoftBank has always been hard to define as a company. Its roots are, as the name suggests, in software, as a distributor; but it was never a bank (fund managers are probably aware of the difference as they currently dump bank shares in favour of software stocks).

The company has been just about everything else — big in Japan in telecoms, inspired in the way it founded its fortunes in investing in an early-stage Alibaba, and then latterly taking stakes or ownership in all aspects of the internet economy, including through its $100bn Vision Fund.

But its latest manoeuvres on the US stock market mean it is really “just a big hedge fund, despite its public listing and retail investor base”, according to Lex.

As the FT revealed on Friday, SoftBank is the “Nasdaq whale” that has bought billions of dollars’ worth of US equity options in a series of trades that helped stoke the big rally in tech stocks (see our explainer on the options activity).

We reported yesterday that the high-risk strategy has worked so far, with
SoftBank sitting on trading gains of about $4bn, despite the tech pullback on Thursday and Friday. The bets have been made at the instruction of founder Masayoshi Son, who once lost $70bn in the dotcom crash.

SoftBank investors are jittery though, with nearly 9bn wiped off its market value on Monday. Tokyo traders cited the perception that its behaviour increasingly resembled that of a hedge fund, with the company populated with former investment bankers with a massive appetite for risk. 

Friday’s sell-off made it the worst week for the tech-heavy Nasdaq 100 index since the Covid-19 plunge in March. Monday is Labor Day in the US and markets are closed, but tech stocks could face a bumpy ride ahead. With anticipated volatility for the Nasdaq 100 reaching its highest level, relative to the S&P 500, in 16 years, SoftBank’s investors have a right to be anxious.

Line chart of Weekly Cboe volatility indices showing Traders brace for swings in tech stocks

The Internet of (Five) Things

1. Samsung seals 5G deal at China’s expense
Samsung Electronics has clinched a $6.6bn deal with Verizon to help it build 5G networks in the US, the order coming as the US increases sanctions on Huawei. Shares in SMIC, China’s largest contract chipmaker, fell 23 per cent in Hong Kong on Monday after reports that the US was planning to blacklist it too. But Rana Foroohar points out that it is not just America, but also China, that is moving to decouple its technology industry. Wired has an interview with Qualcomm’s 86-year-old founder Irwin Jacobs, who explains why the US lacks its own version of Huawei.

2. Amazon deletes 20,000 reviews
Amazon has deleted approximately 20,000 product reviews, written by seven of its top 10 UK reviewers, following a Financial Times investigation into suspicious activity. The FT’s Dave Lee had found evidence the users were profiting from posting thousands of five-star ratings. Meanwhile, Patrick McGee in San Francisco has been looking at the techniques used to achieve five-star ratings for iPhone apps, in today’s Big Read.

Chart showing the importance of the star-rating system for Apps

3. Cornish lithium mines and battery power
Our Big Read over the weekend looked at how the UK’s only known historical lithium mine, active during the second world war, is now the focus of efforts to supply carmakers rapidly transitioning to electric vehicles. The question is whether Cornwall’s resources are big enough to do so at scale. This Medium article looks at how Silicon Valley’s QuantumScape may have achieved the holy grail of pure metallic lithium batteries and says VW expects to have cars on the road using them by 2025. Sifted looks at battery efforts in Europe that compete with Tesla’s plans.

4. Cinema time travel back to blockbuster hits
Tenet, Christopher Nolan’s science fiction epic, made $20m in box-office sales on its debut weekend in the US, in an important test for cinemas looking to roll out blockbusters after the pandemic locked down Hollywood. Isabel Berwick has been back to the movies and says Tenet is a great way to restart the habit.

5. At home with a slice of Netflix and the BBC
. . . or you could just stay home and watch TV or Netflix. Its founder Reed Hastings was at home for a pizza lunch with the FT. “Everybody is locked up and we had the greatest growth in the first half of this year that we ever had,” he tells Alex Barker. We also have a profile of Tim Davie, the new no-nonsense boss of the BBC.

Tech week ahead

Tuesday: Workplace messaging app Slack reports on its July quarter after the US market close

Thursday: Business software and service supplier Oracle reports on its August quarter after the closing bell. Earlier, Sony holds its annual press conference on environment, social and governance initiatives, where CEO Kenichiro Yoshida will lay out the conglomerate's long-term strategies.
Huawei CEO Richard Yu will deliver the keynote address at the company's annual Developer Day, where he is expected to give an update on Huawei Mobile Services, the company's attempt to replace the loss of Google Mobile Services, along with listing progress on its alternative operating system to Android.

Tech tools — home security

Jonathan Margolis looks at five gadgets that will help secure your home: Airthings’ Wave Plus air-pollution sensor, the EZViz DP1 smart doorbell, Netatmo Smart Smoke Alarm, Arlo Pro 3 security camera and the Yi Dome security camera.

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