Adani rout drags India’s weighting in EM Index

Bloomberg

India’s weighting in MSCI’s emerging-market benchmark dropped after the brutal selloff in Adani group’s stocks, giving away its second spot to Taiwan after a rally in the latter’s market.
As of the end of January, Taiwan’s weighting in the MSCI Emerging Markets Index rose to 14.2%, behind leader China’s 31.2%, while India’s fell to the third spot with 13%, according to Bloomberg-compiled data. India captured the second spot from Taiwan in August.
The role reversal between India and Taiwan highlights the contagion of a stock meltdown that has wiped out $112 billion of market value in Gautam Adani’s indebted conglomerate since US-based Hindenburg Research made fraud allegations against the billionaire’s business empire. While the MSCI India Index has lost 4.2% this year, its Taiwan counterpart has surged about 11% as part of a broader North Asian rally induced by China’s reopening optimism.
Foreign investors net bought NT$120 billion ($4 billion) worth of Taiwanese stocks last week, the most since 2005, Bloomberg data shows. Net purchases last Monday helped push the index into bull market territory. Slower Fed rate hikes and optimism of a cyclical recovery for tech, in particular semiconductors, are driving the buoyant market sentiment.
Still, it remains to be seen if the enthusiasm will last as the Taiwan dollar may weaken amid mounting tensions between Washington and Beijing. Much of the index’s advance has been spurred by Taiwan Semiconductor Manufacturing Co., which accounts for 29% of the tech-heavy market.
Meanwhile, Adani and his family have prepaid $1.11 billion worth of borrowings backed by shares as the ports-to-power conglomerate seeks to allay investor fears and stem a stock rout that’s in its third week.
The founders’ early payment will help release 11.77 million shares in Adani Transmission Ltd., the group said in a statement on Monday. As many as 168.27 million shares of Adani Ports & Special Economic Zone Ltd. will be released along with 27.56 million shares of Adani Green Energy Ltd.
Adani Ports extended gains to 9.3% after the announcement but Adani Transmission and Adani Green were down 10% and 5% respectively on the day.
Adani is seeking to restore confidence in his conglomerate’s financial health after a scathing short seller attack in late-January wiped out $118 billion of group’s market value and forced flagship to scrap a share sale. Hindenburg had accused it of accounting fraud, stock price manipulation and pledging their inflated shares for loans — allegations Adani has repeatedly denied.