Japanese regulators are heightening scrutiny of high-risk trades by domestic institutions in the wake of losses related to Archegos Capital Management, sources say, after Sung Kook “Bill” Hwang’s firm collapsed under the weight of billions of dollars in leveraged stock bets.

Although the Mizuho and Mitsubishi UFJ financial groups have been lightly singed by the affair, Nomura Holdings has been badly burnt. It seems Hwang’s appetite for huge bets on tech, media and other stocks in the U.S. and Asia were just too lucrative for Nomura to resist, Reuters reports.

And to think Nomura CEO Kentaro Okuda was just days away from hailing a bumper inaugural year in charge. Instead, a $2 billion claim on a single client now risks erasing pretax profits for the past six months, reports Bloomberg.

Biggest Japan bank joins Nomura in bracing for Archegos loss | BLOOMBERG MARKETS AND FINANCE
Biggest Japan bank joins Nomura in bracing for Archegos loss [March 31] | BLOOMBERG MARKETS AND FINANCE

Meanwhile, the world’s largest pension pot will soon have to choose between political sensitivities and cold hard cash, Bloomberg notes. With Chinese sovereign debt set to be added to the benchmark global bond index, Japan’s Government Pension Investment Fund will have to decide whether to jump in or risk lower returns elsewhere.

The GPIF, which under its last chief tried to “change the world” (as one article put it) through its approach to environmental, social and governance investing, has gone quiet on the issue under its new leadership.

“Under current legislation, we can’t sacrifice returns for the sake of buying environmental names or ESG names,” one GPIF director tells Bloomberg. If the same profit-above-all duty prevails, expect to see Japanese pension money invested in Chinese government debt very soon.