Default by Archegos Capital Management causes Chaos on Wall Street

Archegos is a Greek word that means one who leads the way. Archegos Capital Management is a family office run by Bill Hwang that invests in stocks in markets like the US, China, Korea, and Japan. Hwang who was formerly working for Tiger Asia Management created the Archegos family office in 2013. It had $200 million at the time when it was founded; compared to $10 billion under management in 2020.Tiger Asia has previously pleaded guilty to insider trading of Chinese bank stock. Hwang and his firm in 2012 paid $44 million to settle Securities and Exchange Commission trading charges.On 26 March 2021, Archegos defaulted on margin calls from several global investment banks including Credit Suisse and Nomura Holdings. It liquidated its stake in billions of dollars worth of various stocks which was the main cause for a 27% plunge in the share price of ViacomCBS.On Friday last week, the selling pressure in select US media stocks and Chinese Internet ADRs was due to the forced liquidation of positions by Archegos Capital. ViacomCBS and Discovery closed down more than 27% with Viacom down more than 50% for the week and Discovery down by 45%. For the week Baidu was down more than 18%, Tencent 33%, and Vishop more than 31%.This Forced liquidation of stocks was one of the biggest hedge-fund debacles since Long Term Capital Management in 1998.Credit Suisse and Nomura on Monday said that they could take big hits from their exposure to the hedge fund. This has led traders and investors wondering as to what would happen next. Investors are looking with some concern at the prospect of further large sales hitting financial markets. Some analysts expected the selling to blow over but others were worried that it could have a much wider impact.Morgan Stanley and Goldman Sachs…