The latest vote of no confidence in Gautam Adani’s empire comes from a global index provider, the MSCI. The Financial Index Provider’s review of Adani group shares directs market attention to a key allegation by Hindenburg research. U.S. research firm Hindenburg had accused that many of the biggest “public,” or non-insider, holders of Adani shares are offshore shell corporations and funds linked to the Indian empire.
MSCI said shares held by certain Adani investors should no longer be designated as freely tradable in the public market or “free float”. Hindenburg’s founder Nathan Anderson tweeted, “we view this as validation of our findings”, referring to the MSCI’s review.
After a review of Adani, MSCI just announced:
“characteristics of certain investors have sufficient uncertainty that they should no longer be designated as free float pursuant to our methodology.”
We view this as validation of our findings on offshore stock parking by Adani.
— Nate Anderson (@ClarityToast) February 9, 2023
The Financial Index Provider also cut the weightings of a few Adani firms’ stocks in its global investable indices. That pushed the group’s stocks to continue their fall on Friday, with losses now topping $110 billion and counting. Analysts expect further selling from active investors before the MSCI’s changes on Adani’s stocks come into effect on March 1.
In more bad news for the Indian empire, Norway’s $1.35 trillion sovereign wealth fund said it had sold its entire stake in Adani group stocks.That adds to the loss of confidence in the business empire to navigate and come out of the current crisis anytime soon. That comes amid increased scrutiny of the group by banks and large financial institutions, apart from regulators and the Indian Federal government.
Ratings agencies have also downgraded Adani firms’ bonds to a level just above junk status. The ramifications of the selloff are spreading far and wide.
The Adani crisis has disrupted parliament, and India’s main opposition party is pressuring Prime Minister Narendra Modi over his silence on the issue.
A Reuters commentary shows the warning signs of the Adani groups’ over $110 billion losses should not surprise anyone.
While Adani’s links with international strategic investors offered comfort, the report shows Gautam Adani’s latest troubles have only emphasised persistent doubts about the group’s meteoric rise in recent years.
Picture this, the value of Adani’s firms had jumped seven-fold in three years to $218 billion.
But the latest market rout is only a more pronounced version of a 2021 selloff in Adani stocks. Media reports back then showed shell companies in Mauritius artificially inflated the value of the group’s firms. The links to offshore shell companies in tax haven countries to Adani’s family members have also been reported previously.
So, the Hindenburg report, or the rout in Adani stocks was hiding in plain sight, showed the Reuters report.
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