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At an event at Haifa Port in Haifa, Israel, Tuesday, January 31, 2023, Adani Group billionaire and chairman Gautam Adani said his company will invest more in Israel, according to a survey.
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Adani’s shares continued to fall sharply during Wednesday’s trading session in Mumbai.
Adani Enterprises received a vote of confidence from investors on Tuesday, with a $2.5 billion follow-on public offering (FPO) fully approved on the final day.
The sharp drop reflects an erosion of investor sentiment from a report released by short-selling firm Hindenburg. A January 24 report accused Adani Group companies of “brazen stock manipulation and accounting fraud.”
Adani Group shares fell Wednesday after days of volatile trading.
Stocks of Adani Enterprises It plunged at least 25% on Wednesday afternoon. Anya Port and Special Economic Zone about 20% lower, Adani Green Energy Down more than 5%, Adani Total Gas lost 10%, Adani transmission It’s trading at 3% off.
Shares have plunged to $84 billion since the announcement, according to Reuters.
According to Forbes, the group’s founder and chairman Gautam Adani lost his position as Asia’s richest person to Reliance Industries chairman Mukesh Ambani.
Hindenburg, who said he took a short position in Adani Group, stands to benefit from a decline in the value of those stocks.
Adani’s battle with short-selling firms has put the group’s Wall Street exposure (around $9 billion, according to JP Morgan) into the spotlight.
how did we get here
Indian billionaire Gautam Adani lost his net worth of over $34 billion in just one week. Bloomberg Billionaires Index.
Here’s a timeline of the key events that led to this:
January 25th: Before the Indian market opens on Wednesday in Asia, Hindenburg Research announced short positions in Adani Group companies through US-traded bonds and non-India-traded derivatives. Tick-related stocks plunged on trading day. Gautam Adani’s net worth fell to him $6 billion overnight.
January 26th: Indian markets are closed for public holidays.
January 27th: Adani Enterprises has launched an additional public offering of $2.5 billion despite continued equity sales seen in group company shares. The billionaire’s net worth was further reduced by $20.3 billion to his $92.7 billion.
January 28-29: Adani Group released a long 413-page response over the weekend, warning of legal action against Hindenburg and alleging charges brought against the Indian company. It was a “calculated attack on India and its institutions.”
Hindenburg hit back, accusing the Adani Group of responding as “bloated” and claiming it “ignored all the important allegations” raised.
January 30th: Adani Enterprises Group CFO Jugeshinder Singh defended the group in an interview with CNBC-TV18. He told his CNBC affiliate that Adani Enterprises’ value hasn’t changed “for the simple reason” of share price volatility. Group company shares continued to see more losses.Adani’s Net Worth Drops Another $8 Billion To $84.5 Billion
January 31st: Adani Enterprises’ $2.5 billion equity sale was fully subscribed on the last day of subscription, despite analysts’ concerns that it might go awry.
Who is Gautam Adani?
According to Forbes, the 60-year self-made Indian billionaire expanded his empire through the deals and support of Indian Prime Minister Narendra Modi.
He became a billionaire in 2008 after starting a commodity export company, surpassing Bill Gates in the Bloomberg Billionaires Index in July 2022. Together, they lost $315 billion last year, according to Forbes.
Adani conglomerate owns India’s largest airport operator and the country’s largest port operator. The group recently sought a hostile takeover of Indian media group NDTV. In a filing, the media company said the move was “performed without consent” from its founders.
Adani Despite His Net Worth Seeing A Sharp Drop From Hindenburg Short Selling Reports tweeted a photo With Israeli Prime Minister Benjamin Netanyahu on Tuesday.
The Indian conglomerate has completed a $1.15 billion takeover of Israel’s Haifa port, according to Reuters.
What is the impact?
Hindenburg’s allegations call into question the expansion of the Adani Group. This was mainly due to debt, due to lax regulation that allowed the acquisition to proceed.
But economists CNBC spoke to dismissed the long-term ramifications.
“I think the incident with the Adani Group will be seen in isolation,” Gerald van der Linde, HSBC’s head of equities strategy for Asia Pacific, told CNBC. It’s one of the best in the entire region, and the growth is visible and more predictable than elsewhere in the region.”
“There could be a negative impact on sentiment and flows in the short term, but it shouldn’t last long in the medium term,” said Sonal Varma, chief economist for India and Asia ex-Japan at Nomura. ..
“The key drivers of India’s medium-term growth prospects remain unchanged, corporate and bank balance sheets are much stronger, reforms are focused on enabling investment and boosting productivity, and India As a large market, we will benefit from ongoing supply chain diversification,” she added.
When asked whether investors should buy Adani shares at this time, Smart Investor David Kuo said frankly:
“What Hindenberg is alluding to is that there is a debt problem, and although that itself may not be reflected in the stock price, there may be a debt problem,” Kuo said on CNBC. mentioned inStreet sign Asia”.
“We hold a lot of bonds outside of India. If the value of these bonds falls, it will affect the company,” he said.
“Whether you believe the Hindenburg report or not, I think something needs to happen. Something needs to be clarified before investors jump in,” he added.
– CNBC’s Seema Mody contributed to this report.
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