MSCI refrains from changing Adani Companies Index
2023.02.16 09:39
MSCI refrains from changing Adani Companies Index
By Tiffany Smith
Budrigannews.com – Updates to the weightings for Adani Total Gas and Adani Transmission, two of India’s Adani Group companies, will be delayed until the benchmark review in May, according to index provider MSCI.
MSCI stated that as of February 16, the updates to Adani Total Gas and Adani Transmission that were reversed during the February index review would be reflected in the MSCI Index Product files.
Starting in February, MSCI will also give all associated securities of Adani Group a special treatment in the MSCI Equity Indexes.
Since a critical report issued on January 24 by U.S. short-seller Hindenburg Research, shares of Adani Total Gas have lost over 70%. The stock briefly gained in the early hours of Thursday trading before falling to close down 5%.
After initially rising by 5%, Adani Transmission shares also settled nearly 5% lower.
Outside of normal business hours in India, Adani Group did not immediately respond to a request for comment.
After reevaluating the number of freely traded shares, MSCI said last week that it would reduce the weightings of four Adani Group companies in its indexes, including the flagship company Adani Enterprises.
The proposed changes to Adani Total Gas and Adani Transmission will be delayed until May due to “potential replicability issues,” according to MSCI. The new index weightings were supposed to go into effect on March 1. According to its approach, indexes must be replicated “in an actual portfolio in a cost-effective manner.”
When Reuters inquired about the reasons behind the changes being reversed shortly after they were made public last week, MSCI did not immediately respond.
The adjustments made to the weightings of Adani Enterprises and ACC, a significant Indian cement company that the Adani Group bought from Holcim (SIX:) are still scheduled to proceed this year.
MSCI determined that there was “sufficient uncertainty” surrounding some investors in Adani companies after examining the size of companies’ free floats.
Hindenburg had accused the Indian conglomerate of stock manipulation and improper use of offshore tax havens before the MSCI decision was made. The group has said there was nothing wrong.
The Hindenburg report has thrown Adani, led by billionaire Gautam Adani, into crisis, reducing the value of the group’s businesses by approximately $120 billion.
According to a document seen by Reuters, Adani and two of its main units that have been affected by the short-selling storm in recent weeks are scheduled to hold calls with bond investors on February 16 and February 21.
Standard Chartered, on the other hand (OTC:) investors should “not be concerned” about any exposure to the conglomerate, according to the company’s chief executive. In a lengthy response to the claims made by the short-seller, Adani mentioned the lender when it talked about its relationships with global financiers.
DBS Group of Singapore (OTC:) previously stated that it manages its exposure to Adani, whereas Indian lenders to the company have stated that their exposure is manageable.
