Adani Community Saga: India’s market place to the test


India has worked hard to try to raise its profile on the world stage for companies looking to do business and investors seeking returns but accusations of stock manipulation accounting fraud against the dining group conglomerate by short seller Hindenburg research and leading to a lot of questions about the credibility of.

India's Market joining us right now for some broader context on what is happening here is Marco papage strategist at Clock Tower it's it's been quite an extraordinary um as I said Saga to behold I'm curious what you think the the headline takeaway for you is in what we've been seeing of course there have been lots of.

Accusations against this company they've denied them thus far but that hasn't stopped the market from selling well you know um I'm a macro investor so I look at this from a very top-down perspective and what's been extraordinary has really been the performance of Indian assets despite a commodity bull market since 2020. so in.

2021 in particular something very interesting happened Indian stocks absolutely outperformed the rest of Emerging Market complex actually India's been the best performing Equity market like in the world including the us since 2020. and in 2021 this happened despite the commodity outperformance which tends to hurt Indian economy because there's.

Such a huge commodity importer and I think that this really was about the anti-china trade China started regulating its TMT sector and all these large allocators flooded into India as an anti-china alternative if you will but the problem is that now in 2023 we have uh we have sign als that China is going to stimulate growth as growth goes.

Up so do Commodities and that creates a very pernicious macro context for Indian equities broad or no fraud Marco they'll help me with this and I think this is the biggest issue which is fundamentally do you believe the numbers that you get out of India do you believe uh the the legal and sort of the laws if you will.

Are there to protect investors and do you believe that Shenanigans are taking place so you're talking about governance right and a lot of investors again as China started to become less pro-business looked to India as a governance alternative because it has presumably better governance and my answer to your.

Question is look I look at India as any emerging market economy and so there will be a level of shenanigans than an Emerging Market investor has to be comfortable with what I think is interesting is how that adage that Emerging Markets are a place where you know things like this do happen from time to time was kind of lost over the.

Last two years as investors plowed into India as some sort of a Beacon of Hope in the Emerging Market complex and I think you're starting to see that unravel a little bit so it's not that India is worse off as the rest of Emerging Markets I think what we're being reminded today is that India is an emerging market.

And and therefore you look at the adani situation you think what I think that it's merely a catalyst or a broader sell-off that honestly is probably 18 12 months um you know overdue India not performance makes no fundamental fact look India needs to invest more in its infrastructure if it's going to benefit.

From this French Shoring onshoring whatever Shoring you know pieces that everybody thinks is happening there is absolutely no evidence that FDI flows into India have gone into manufacturing have gone into fixed Capital asset formation and there's no evidence that India has gained market share at all so you have a headline of apple or some.

Other company moving production to India those are just little anecdotal pieces of evidence there's no macro evidence in the data that India is grabbing market share from China and so I think a lot of investors just plowed into the country uh you know as a as a panic trade over the last two years and are now getting uh whipsawed by the macro context which.


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