India’s FM says markets ‘well regulated’ after Adani storm
FLAGSHIP ADANI FIRM PLUNGES 35 PER CENT AT ONE POINT AS BOTH HOUSES OF PARLIAMENT ADJOURNED AMID ROW
MUMBAI: Indian Finance Minister Nirmala Sitharaman said on Friday her country’s markets were “well regulated” and she did not expect the controversy around tycoon Gautam Adani’s business empire to affect investor confidence. The combined market cap of Adani Group’s listed units has collapsed by more than $120 billion — about half of the group’s value — since US short-seller Hindenburg Research released an explosive report last week.
It accused Adani of accounting fraud and artificially boosting its share prices, calling it a “brazen stock manipulation and accounting fraud scheme” and “the largest con in corporate history”.
India remained “an absolutely well governed” country and a “very well regulated financial market”, Sitharaman told broadcaster News18.
“One instance, however much talked about globally, I would think is not going to be indicative of how well Indian financial markets have been governed,” Sitharaman said.
Sitharaman said public sector financial institutions had released detailed statements showing they had limited exposure to Adani Group and would not be significantly affected by the share crash. “I think the investor confidence which existed before shall continue even now,” she added.
Meanwhilw, both houses of
India’s parliament were adjourned on Friday amid chaotic scenes as some lawmakers demanded an inquiry following the meltdown of shares in billionaire Gautam Adani’s group companies, which some fear could spark wider financial turmoil.
Shares in Adani companies recovered after sharp falls earlier in the day, but the seven listed firms have still lost about half their market value — or more than $100 billion combined — since US short-seller Hindenburg Research last week accused the group of stock manipulation and unsustainable debt.
Adani Group, one of India’s top conglomerates, has rejected the criticism and denied wrongdoing in detailed rebuttals, but that has failed to arrest the unabated fall in its shares.
For Adani, a former school drop-out from Gujarat, the western home state of Indian Prime Minister Narendra Modi, the crisis presents the biggest reputational and business challenge of his life, as his firm struggles to assuage investor concerns.
Credit ratings agency Moody’s warned on Friday the share plunge could hit the group’s ability to raise capital, although peer Fitch saw no immediate impact on its ratings.
“These adverse developments are likely to reduce the group’s ability to raise capital to fund committed capex or refinance maturing debt over the next 1-2 years. We recognise that a portion of the capex is deferrable,” Moody’s said.
Amid fears the turmoil could spill over into the broader financial system, some Indian politicians have called for a wider investigation into the matter, and sources have said the central bank has asked lenders for details of exposure to the group.
The speakers of both houses of parliament adjourned proceedings on Friday as some lawmakers disrupted business by shouting slogans such as: “We want a joint parliamentary committee (to investigate)” and “Stop looting the poor!” On Thursday, S&P Dow Jones Indices said it would drop the conglomerate’s flagship Adani Enterprises from widely used sustainability indexes on February 7, which would blunt their appeal for environment-conscious investors.
“Contagion concerns are widening, but still limited to the banking sector,” said Charu Chanana, a market strategist with Saxo Markets in Singapore.