MSCI to reduce weighting of four Adani companies after Hindenburg report | Business and economic news

Remembering the US stock index compiler includes Adani Enterprises, the main company of the group led by Indian billionaire Gautam Adani.

US stock index compilation company MSCI says it will reduce the weightings of four Adani Group companies, including its flagship company Adani Enterprises, in its indexes after reassessing the number of freely traded shares.

The move comes after a Jan. 24 report by US short seller Hindenburg Research, which accused the Indian conglomerate of improperly using offshore tax havens and stock manipulation. The group has denied any wrongdoing.

The Hindenburg report plunged the group, led by billionaire Gautam Adani, into crisis, wiping about $110 billion from the value of seven major listed companies.

In addition to Adani Enterprises – the group’s incubator for coal miners and new projects – MSCI also plans to cut weightings in Adani Total Gas – a joint venture with France’s TotalEnergies and Adani Transmission, a power transmission company.

It will also reduce the weight of ACC, India’s leading cement company that Adani Group bought from Holcim last year and which is not one of the group’s seven main listed companies.

Adani Group did not immediately respond to Reuters’ request for comment on Friday.

The four companies had a combined weighting of 0.4 percent in the MSCI emerging market index as of January 30. The changes will take effect on March 1.

“Lower free float will require passive investors to sell stocks to reduce their tracking error with the index,” said Brian Freitas, an analyst at Periscope Analytics who posts on Smartkarma.

“There could be some selling by active investors before that because they are trying to sell before passive investors.”

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