Adani Group stock prices drop after MSCI says it’s monitoring

Adani Group stock prices drop after MSCI says it’s monitoring

At the beginning of trading, the shares of the Bloomberg Adani Group dropped, ending a two day reprieve, after MSCI Inc. said it was looking into the amount of Adani Group-linked shares that are freely tradable in public markets.

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Nine of the group's 10 stocks declined, with flagship Adani Enterprises Ltd. dropping as much as 10% after a 35% jump over the previous two sessions. The group's market value has plunged over the past two weeks after US short-seller Hindenburg Research published a critical report, with losses of as much as $117 billion.

MSCI will announce and implement any changes affecting the calculations of the free float and market value of the Adani group stocks when it releases its February index review on Thursday.

This is unmitigated bad news for the Adani Group companies, and a lot of the gains made over the last couple of days could be wiped out today, according to Brian Freitas, an analyst at Smartkarma. There will be passive selling. Billionaire Gautam Adani has been stepping up measures to reassure investors and banks by repaying loans and pledging to reduce debt ratios, while the slump in the group's dollar debt has attracted buyers such as Oaktree Capital Management and Davidson Kempner Capital Management.

The Adani group plans to prepay a $500 million bridge loan next month after some banks balked at refinancing the debt after the Hindenburg report. Barclays Plc, Standard Chartered Plc, and Deutsche Bank AG were among the banks that lent Adani $4.5 billion to finance the purchase of Holcim Ltd. cement assets last year. A portion of the loan is due March 9.

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