Business

Plummeting Adani shares send ripples through India’s parliament, finance sector

Published

1 year ago

February 3, 2023

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Plummeting Adani shares send ripples through India's parliament, finance sector

Shares of India’s Adani Group companies fell sharply on Friday as ripples from a market rout disrupted parliament for a second day, fanning fears of systemic risk after a critical research report by a U.S. short-seller.

Seven listed Adani enterprises lost more than half their market capitalisation, which shrivelled to less than $100 billion, after the Hindenburg Research report raised questions about the conglomerate’s debt levels and use of tax havens.

Investor sentiment was jolted further after the group shelved its $2.5-billion share sale on Wednesday, one of the biggest setbacks for its billionaire chairman, Gautam Adani, whose fortunes had risen rapidly in recent years.

Lawmakers have called for a wider investigation of the matter, and sources have told Reuters the central bank has asked lenders for details of exposure to the group.

Some politicians shouted slogans against Adani, an associate of Prime Minister Narendra Modi, in parliament on Friday.

“We want a joint parliamentary committee (to investigate),” they said. “Stop looting the poor.”

Adani has called the Hindenburg report baseless and said its financials remain strong, but investor sentiment has withered, bringing an unabated fall in stock prices.

Shares of the flagship company, Adair Enterprises Ltd (ADEL.NS), were down 16% on Friday after earlier losing 35% to their lowest level since March 2021.

The stock’s new low took its losses to nearly $33.6 billion since last week, for a decline of 70%.

Adani Ports and Special Economic Zone Ltd (APSE.NS) was down 2%, while Adani Transmission Ltd (ADAI.NS) and Adani Green Energy Ltd (ADNA.NS) slumped 10% each.

Adani Total Gas Ltd (ADAG.NS), a joint venture with France’s TotalEnergies SE (TTEF.PA), fell 5%.

In a statement, TotalEnergies said it had limited exposure from stakes in Adani companies and had not re-evaluated the stakes.

“Contagion concerns are widening, but still limited to the banking sector,” said Charu Chanana, a market strategist with Saxo Markets in Singapore. “The focus remains on further risks of index exclusions.”

On Thursday, S&P Dow Jones Indices said it would drop the Adani Enterprises flagship from widely used sustainability indices on Feb. 7, which would blunt their appeal for environment-conscious investors.

“One of the big risk factors to watch for now is if more indices remove Adani stocks,” said Chanana. “This can result in foreign outflows as funds sell Adani stocks, further aggravating confidence issues.”

Foreign investors, many already underweight on India as they consider its stock market overpriced, are reducing exposure. Adani’s wipeout could spread if it triggers a bigger mood shift.

In its report, Hindenburg said key listed Adani companies had “substantial debt” while shares in seven listed firms had a downside of 85% due to what it called sky-high valuations. It also alleged stock manipulation.

The Adani group said the allegation of stock manipulation had “no basis” and stemmed from ignorance of Indian law. It added that over the past decade, group companies have “consistently de-levered”.

The seven listed Adani firms together have a market capitalisation of $113 billion, versus $218 billion before the Hindenburg report.

For Adani, a former school dropout from Gujarat, Modi’s western home state, the crisis presents the biggest reputational and business challenge of his life.

The share meltdown is a dramatic turn of fortune for Adani, 60, who in recent years forged partnerships with, and attracted investment from, foreign giants as he pursued global expansion in industries from ports to power.

Adani has ceded the crown of Asia’s richest person to Indian rival Mukesh Ambani of Reliance Industries Ltd (RELI.NS) as he has slid to 17th in Forbes’ ranking of the world’s wealthiest people. He had been third, after Elon Musk and Bernard Arnault.

The prices of U.S. dollar bonds issued by group members edged higher on Friday after diving the previous day.

Adani Green’s bonds maturing in September 2024 gained about 7 cents to 69.69 cents, off Thursday’s record low of 60.56 cents.

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Business

Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

Published

3 days ago

May 17, 2024

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

A notable Chinese company has expressed keen interest in expanding its investment in Pakistan, in yet another sign of investor confidence boost in the leadership of Prime Minister Shehbaz Sharif.

A delegation from Chinese firm MCC Tongsin Resources led by its Chairman Wang Jaichen called on PM Shehbaz here on Friday.

The premier invited the Chinese company to invest in Pakistan’s mining sector and manufacturing of export goods.

Shehbaz assured the delegation that his government would extend all-out facilitation to the company from minerals exploration and processing to the export of goods.

The PM instructed the relevant federal ministers and officers to continue consultation with the Chinese firm, taking the Balochistan chief minister, provincial departments and stakeholders on board.

The delegates reposed trust in PM Shehbaz’s leadership, and expressed keen interest in enhancing their investment in Pakistan’s mining and minerals sectors.

The delegation briefed Prime Minister Shehbaz about the construction of a mineral park in Pakistan and their future investment plans.

The premier welcomed the Chinese firm and highlighted the priority steps by his government to promote foreign investment in Pakistan.

He said that being a time-tested friend, China supported Pakistan in every difficult hour for which the Pakistani nation was grateful to the leadership and people of China.

Federal ministers Ahad Khan Cheema, Dr Musaddik Malik, Rana Tanveer Hussain, Jam Kamal Khan and relevant senior officers attended the meeting.

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Business

Govt jacks up power price by Rs1.47 per unit

Published

3 days ago

May 17, 2024

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Govt jacks up power price by Rs1.47 per unit

The government on Friday increased the electricity tariff by Rs1.47 per unit.

According to Nepra sources, the collection from consumers will take place in August, September, and October.

The electricity companies had requested the funds as part of the third quarter adjustment for 2023-2024, seeking Rs 31.34 billion under capacity charges.

Sources said that Rs5.57 billion were requested for operation and maintenance costs, and Rs12.38 billion were requested for the transmission and distribution impact under monthly fuel cost adjustment.

Previously, Nepra had completed the hearing on the electricity companies’ request under the quarterly adjustment.

Nepra approved the Power Division’s request, allowing an increase of Rs 1.45 per unit in electricity prices.

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Business

Hong Kong allows China’s digital yuan to be used in local shops

Published

3 days ago

May 17, 2024

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Hong Kong allows China's digital yuan to be used in local shops

Hong Kong will allow mainland China’s pilot digital currency to be used in shops in the city, the head of its de facto central bank said on Friday, marking a step forward for Beijing’s efforts to internationalise the yuan amid rising geopolitical tensions.

The programme, backed by Beijing, will allow mainland Chinese and Hong Kong residents to open digital yuan wallets via a mobile app developed by China’s central bank and will permit them to make payments in retail shops and some online stores in Hong Kong and in mainland China.

Transactions using e-CNY, predominantly for domestic retail payments in China, hit 1.8 trillion yuan ($249.27 billion) as of end of June 2023, with 120 million digital wallets opened, according to the latest disclosure from China’s central bank.

Using the wallet, users can make payments at over 10 million merchants in 17 provinces and cities in the mainland.

Each wallet used in the city will be subject to a balance limit of 10,000 yuan, with single transactions and daily payments capped at 2,000 yuan and 5,000 yuan, respectively, officials from the Hong Kong Monetary Authority said.

Peer-to-peer transfers will not be allowed at the moment, according to the HKMA.

“By expanding the e-CNY pilot in Hong Kong .. users may now top up their wallets anytime, anywhere without having to open a mainland bank account, thereby facilitating merchant payments in the mainland by Hong Kong residents,” HKMA Chief Eddie Yue said.

Currently, users of other digital yuan wallets such as those operated by Ant Group and Tencent can make payments in the city.

Industrial and Commercial Bank of China, Bank of China Ltd, China Construction Bank Corp and Bank of Communications Co have been selected as e-CNY wallet operators.

The yuan’s use in global finance remains low, though it has shown steady increases.

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