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Adani row rocks India’s parliament amid financial contagion fears

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Adani row rocks India's parliament amid financial contagion fears

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 U.S. 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.

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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 told Reuters 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 (ADEL.NS) from widely used sustainability indexes on Feb. 7, which would blunt their appeal for environment-conscious investors.

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“Contagion concerns are widening, but still limited to the banking sector,” said Charu Chanana, a market strategist with Saxo Markets in Singapore.

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

Adani Enterprises shares closed 1.4% higher, after earlier slumping 35% to hit their lowest since March 2021 during trade. That 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 up 8%, while Adani Transmission Ltd (ADAI.NS) and Adani Green Energy Ltd (ADNA.NS) were both down 10%.

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 to stakes in Adani companies and had not re-evaluated them.

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India’s divestment secretary Tuhin Kanta Pandey told Reuters that shareholders and customers of state-run Life Insurance Corp (LIC) (LIFI.NS) should not be concerned about its exposure to Adani group. LIC holds a 4.23% stake in the flagship Adani firm, while its other exposures include a 9.14% stake in Adani Ports and 5.96% in Adani Total Gas.

BIGGEST CHALLENGE

Adani, 60, has in recent years forged partnerships with, and attracted investment from, foreign giants as he pursued global expansion in industries from ports to power.

The market and financial crisis means foreign investors, many already underweight on India as they consider its stock market overpriced, are reducing exposure.

Asked about recent stock market weakness, India’s finance minister Nirmala Sitharaman told Network18 that “one instance, however much talked about globally it may be, I would think is not going to be indicative of how well Indian financial markets are governed.”

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In its report, Hindenburg said key listed Adani companies had “substantial debt” and shares in the 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 listed Adani firms now have a combined market value of $107.5 billion, versus $218 billion before Hindenburg’s report.

The plunge has forced Adani to cede 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.

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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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Netherlands remembers World War Two dead amid tight security

Netherlands remembers World War Two dead amid tight security

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Netherlands remembers World War Two dead amid tight security

Dutch King Willem-Alexander and Prime Minister Mark Rutte joined around 4,000 people on Saturday for the country’s annual World War Two remembrance ceremony amid restricted public access and heightened security due to the war in Gaza.

The ceremony on Amsterdam’s central Dam square, with the traditional two minutes of silence at 8 pm (1800 GMT) to commemorate the victims of World War Two, passed smoothly despite fears that there might be protests.

Normally some 20,000 people attend the Dam commemoration without having to register. But earlier this week municipal authorities announced unprecedented security measures to keep the ceremony safe and avoid possible disruptions linked to the Israel-Hamas war.

At the opening of a Holocaust Museum in Amsterdam in March, pro-Palestinian protesters opposed to Israel’s military campaign in Gaza set off fireworks and booed Israeli President Isaac Herzog as he arrived on a visit.

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Every town and the city in the Netherlands holds its own remembrance ceremony on May 4 and tens of thousands of people attend the events. The Netherlands then marks on May 5 the anniversary of its liberation from Nazi occupation in 1945. 

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Spain’s Sanchez says he will stay on as PM despite wife’s graft probe

Spain’s Sanchez says he will stay on as PM despite wife’s graft probe

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Spain's Sanchez says he will stay on as PM despite wife's graft probe

Spain’s Prime Minister Pedro Sanchez said that he would continue in office in response to a graft probe of his wife that he says amounts to a campaign of harassment.

Sanchez announced last Wednesday that he was mulling resignation after a Madrid court opened a preliminary probe into suspected influence peddling and corruption targeting his wife Begona Gomez.

“I need to stop and think whether I should continue to head the government or whether I should give up this honour,” he wrote in a four-page letter posted on X, formerly Twitter.

Thousands of supporters massed outside the headquarters of Sanchez’s Socialist party in Madrid on Saturday chanting “Pedro, stay!”

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Sanchez has said the move against his wife is part of a campaign of “harassment” against them both waged by “media heavily influenced by the right and far right” and supported by the conservative opposition.

Spain’s public prosecutor’s office on Thursday requested the dismissal of the investigation.

But Sanchez, an expert in political survival who has made a career out of taking political gambles, has suspended all his public duties and retreated into silence.

Last Thursday, he had been due to launch his party’s campaign for the May 12 regional elections in Catalonia in which his Socialists hope to oust the pro-independence forces from power.

‘Harassment’ campaign

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The court opened its investigation into Sanchez’s wife in response to a complaint by anti-corruption pressure group Manos Limpias (Clean Hands), whose leader is linked to the far right.

The group, which has presented a litany of unsuccessful lawsuits against politicians in the past, said in a statement on Wednesday that it had based its complaint on media reports and could not vouch for their veracity.

While the court did not give details of the case, online news site El Confidencial said it was related to her ties to several private companies that received government funding or won public contracts.

Sanchez has been vilified by right-wing opponents and media because his minority government relies on the support of the hard-left and Catalan and Basque separatist parties to pass laws.

They have been especially angered by his decision to grant an amnesty to hundreds of Catalan separatists facing legal action over their roles in the northeastern region’s failed push for independence in 2017.

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That amnesty, in exchange for the support of Catalan separatist parties, still needs final approval in parliament.

The opposition has since Wednesday mocked Sanchez’s decision to withdraw from his public duties for a few days, dismissing it as an attempt to rally his supporters.

“A head of government can’t make a show of himself like a teenager and have everyone running after him, begging him not to leave and not to get angry,” the head of the main opposition Popular Party, Alberto Nunez Feijoo, said on Thursday.

Sanchez, he said, had subjected Spain to “international shame”. 

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Scores killed in Kenya after dam bursts following weeks of heavy flooding

Scores killed in Kenya after dam bursts following weeks of heavy flooding

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Scores killed in Kenya after dam bursts following weeks of heavy flooding

At least 42 people died when a dam burst its banks near a town in Kenya’s Rift Valley, the local governor told AFP on Monday, as heavy rains and floods battered the country.

The dam burst near Mai Mahiu in Nakuru county, washing away houses and cutting off a road, with rescuers digging through debris to find survivors.

“Forty-two dead, it’s a conservative estimate. There are still more in the mud, we are working on recovery,” said Nakuru governor Susan Kihika.

Monday’s dam collapse raises the total death toll over the March-May wet season to 120 as heavier than usual rainfall pounds East Africa, compounded by the El Nino weather pattern.

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Meanwhile, the Kenya Red Cross said Monday it had retrieved two bodies after a boat carrying “a large number of people” capsized at the weekend in flooded Tana River county in eastern Kenya, adding that 23 others had been rescued.

Video footage shared online and broadcast on television showed the crowded boat sinking, with people screaming as onlookers watched in horror.

On Saturday, officials said 76 people had lost their lives in Kenya since March.

Flash floods have submerged roads and neighbourhoods, leading to the displacement of more than 130,000 people across 24,000 households, many of them in the capital Nairobi, according to government figures released Saturday.

Schools have been forced to remain shut following mid-term holidays, after the education ministry announced Monday that it would postpone their reopening by one week due to “ongoing heavy rains”.

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“The devastating effects of the rains in some of the schools is so severe that it will be imprudent to risk the lives of learners and staff before water-tight measures are put in place to ensure adequate safety,” Education Minister Ezekiel Machogu said.

“Based on this assessment, the Ministry of Education has resolved to postpone the reopening of all primary and secondary schools by one week, to Monday, May 6, 2024,” he said.

Turmoil across the region
The monsoons have also wreaked havoc in neighbouring Tanzania, where at least 155 people have been killed in flooding and landslides.

In Burundi, one of the world’s poorest countries, around 96,000 people have been displaced by months of relentless rains, the United Nations and the government said earlier this month.

Uganda has also suffered heavy storms that have caused riverbanks to burst, with two deaths confirmed and several hundred villagers displaced.

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Monday’s dam collapse comes six years after a similar accident at Solai in Nakuru county killed 48 people, sending millions of litres of muddy waters raging through homes and destroying power lines.

The May 2018 disaster involving a private reservoir on a coffee estate also followed weeks of torrential rains that sparked deadly floods and mudslides.

El Nino is a naturally occurring climate pattern typically associated with increased heat worldwide, leading to drought in some parts of the world and heavy rains elsewhere.

Late last year, more than 300 people died in rains and floods in Kenya, Somalia and Ethiopia, just as the region was trying to recover from its worst drought in four decades that left millions of people hungry.

The UN’s World Meteorological Organization said in March that the latest El Nino is one of the five strongest ever recorded.

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