Speaker 1: Welcome to Bloomberg Opinion. I'm Ronnie Quinn. This week cats
Speaker 1: continue to jump out of backs. John Authors and Mark
Speaker 1: Grantfield on the f o MC meeting that may have
Speaker 1: invited back the Central Bank? Put later, how does the
Speaker 1: empire strike back? Over the years, About thirty percent of
Speaker 1: Adanni's financing is denominated in foreign currencies. They have borrowed
Speaker 1: extensively on the dollar market. They have also thought funding
Speaker 1: from foreign banks in the overseas expansion. Julie Ran on
Speaker 1: the outlook for Gotamadanni's Adanni Enterprises, the conglomerate responsible for
Speaker 1: so much of India's infrastructure central to its industrial growth,
Speaker 1: rocked by a short seller's report. First though to the
Speaker 1: f O m C and Bloomberg opinions. John Authors, so
Speaker 1: John is Michael Foley of Jake Morgan put in, Powell
Speaker 1: doesn't find the market. That's the old saw turned on
Speaker 1: his head. But that's exactly what happened. Where was Powell's
Speaker 1: hat costume? He said he needed to put it on
Speaker 1: and snarl, but he didn't. He needed to put on
Speaker 1: his hook costume. I think he probably tried to do
Speaker 1: some extent, but he didn't do a good enough job
Speaker 1: where I didn't hear very much of anything hawkish. Oh.
Speaker 1: I think he started out by making clear that they
Speaker 1: did expect to hike rates further. He made rather route
Speaker 1: like comments that the Fed's job wasn't done. He said,
Speaker 1: in as many words that we low from history that
Speaker 1: the risks from listening too soon are very serious, and
Speaker 1: it's not clear what you do about it if you
Speaker 1: make that mistake, whereas we know what we can do
Speaker 1: if we overtighten, we have tools to deal with that.
Speaker 1: So it's fairly clear to me that he meant to
Speaker 1: be hawkish. He was trying to do the kind of
Speaker 1: thing like you rightly said, I was suggesting that in
Speaker 1: a column he would need to do, which would sound really,
Speaker 1: really aggressive. He did, I think, make one awful mistake.
Speaker 1: And I don't know whether this was a simple flub
Speaker 1: or whether it's a Freudian slip to reveal his whole thinking.
Speaker 1: But when he was asked if he was bothered about
Speaker 1: financial conditions having eased since the last which is wrong. Yeah,
Speaker 1: exactly and so wrong that I suspect it wouldn't amaze
Speaker 1: me if he just admitted I misheard that question. And
Speaker 1: because what he absolutely had to say in that situation
Speaker 1: was yes, I'm worried that financial conditions have eased. They
Speaker 1: cannot carry on like this or otherwise we'll have to
Speaker 1: keep hiking. Or it was straightforward requirement of him from
Speaker 1: the text. And it just isn't true that the financial conditions,
Speaker 1: whether you use our Bloomberg measure with the Goldman Sax measure,
Speaker 1: which are the two most popular, but on any sensible measure,
Speaker 1: they are somewhat tighter than they were in December, and
Speaker 1: a lot sorry tighter. I just did the same thing.
Speaker 1: That wasn't a Freudian lip that I suspect might have
Speaker 1: been what held it, And they are considerably looser than
Speaker 1: they were in August before inflation began to come down.
Speaker 1: Maybe he was afraid to talk about the market again.
Speaker 1: This is the dangerous area where it's almost like we're
Speaker 1: getting into Freudian psychoanalysis of this one man's personality, or
Speaker 1: it's almost like a textual analysis, hypertextual it's it has
Speaker 1: There was one time when they changed one word in
Speaker 1: their communication from one meeting to the next, and I
Speaker 1: still let to write an eight hundred word column about it,
Speaker 1: And there was probably eight hundred words, right, that's the
Speaker 1: funny thing about the federal area. Yes, But I think
Speaker 1: in this case, perhaps the bottom line, and this may
Speaker 1: be the line that holds up, is that he did
Speaker 1: say that the FED would be data dependent in future.
Speaker 1: And if you're being data dependent, you cannot therefore be
Speaker 1: absolutely committing yourself to tightening and tightening and technique. There
Speaker 1: is another potential. Is there something the third is seeing
Speaker 1: about the economy that markets may be seeing but that
Speaker 1: we're not. Is it possible that er Powell is actually
Speaker 1: worried about a deeper recession. It's possible. It's possible. It's
Speaker 1: also possible for activities worried about overheating, that we have
Speaker 1: not a soft lending but no landing. We keep flying,
Speaker 1: which would be wonderful on many levels, except that it
Speaker 1: would mean inflation and still had been vanquished, and he
Speaker 1: would need to keep greats higher. And that's something we
Speaker 1: should pretty much all hope happens, except those of us
Speaker 1: who have invested in assets that require low interest rates,
Speaker 1: and for those of us that for the that that
Speaker 1: includes a huge junk of our clients, readers, and viewers, obviously,
Speaker 1: but that is a concern that does worry me if
Speaker 1: you look at again, this was perhaps unwise of him.
Speaker 1: Either this was unwise or it was his revealing his
Speaker 1: hands too clearly. He did make the point that inflation
Speaker 1: expectations have notably come under control, that they haven't become
Speaker 1: If anything, they have been re anchored, which is true.
Speaker 1: The FED Zone New York Fed Zone survey very clearly
Speaker 1: shows that. And he then made the point, what we
Speaker 1: don't want to do is cut too soon and then
Speaker 1: see expectations come unmoored again. But you could look at
Speaker 1: that more as some kind of a Freudian slip, or
Speaker 1: tell that he does actually think he's winning and that
Speaker 1: he can turn turn around quite soon. There was something
Speaker 1: else that jumped out of me. He teased the minutes,
Speaker 1: which was the strangest thing. He wouldn't talk about whether
Speaker 1: the committee had talked about pausing, what that would look like,
Speaker 1: how much they had talked about it. But he did
Speaker 1: say that there will be more detail in the minutes
Speaker 1: which come out in three weeks. Why wouldn't he go
Speaker 1: into details. That's that was an interesting one. He The
Speaker 1: last time that happened from memory was last year on
Speaker 1: the subject of how they were going to do qut
Speaker 1: and he said it was very similar to that that. Well,
Speaker 1: we did discuss qute and you'll be finding out more
Speaker 1: about that in the minute um. And that was generally
Speaker 1: regarded as quite a successful piece of signaling and communication.
Speaker 1: They didn't want to hit people with everything all at once.
Speaker 1: I guess that's why. I guess, if you wanted a
Speaker 1: logical explanation, maybe it is that, in fact, they are
Speaker 1: feeling more dubbish than he wanted to let on today today.
Speaker 1: But it's also possible that they're actually more hawkish than
Speaker 1: he wanted to let on to day. Honestly, it was.
Speaker 1: It was quite a strange news conference talked to us
Speaker 1: about it wasn't the yield curve with saw the tenure
Speaker 1: yield come down from above three or around three below
Speaker 1: three or four. That was quite the move. It was
Speaker 1: a bit, I mean, that was more easying right there. Yeah,
Speaker 1: And well and the two year and yes, I mean
Speaker 1: cats continue to jump out of bags if you or
Speaker 1: if you if you want another version. You did see
Speaker 1: a significant weakening for the dollar. So the euro briefly
Speaker 1: got above one dollar ten cents for the first time
Speaker 1: since I think April of last year. And you know,
Speaker 1: obviously there's a very big deal with the ECB coming
Speaker 1: up to see whether that gets confirmed. That does ease
Speaker 1: conditions a little. You can see that as some kind
Speaker 1: of counteract because it does make it easier for people
Speaker 1: to sell stuff abroad exactly. Does also, however, hype up
Speaker 1: inflation a bit more makes important more expense, which is
Speaker 1: another reason why you wonder why he said that, why
Speaker 1: he did what he did. Javin Morgan, just to return
Speaker 1: sees one more basis point. Hikeers do a lot of
Speaker 1: people and then hold. But Jaf Morgan says, hold for
Speaker 1: a year. As you see conditions right now, would it
Speaker 1: take a year of holding to get rates inflation and
Speaker 1: the economy and to balance That's frankly been the scenario.
Speaker 1: I have been expecting a year of holding. If you
Speaker 1: remember back when Ben Bernanke stopped his hiking campaign that
Speaker 1: had gone on for years, started by green spanning eighty six,
Speaker 1: they kept the rate as I think it was five
Speaker 1: and a quarter five and a half, which is actually
Speaker 1: not at all dissimilar to way not too far away here.
Speaker 1: They kept rates there for over a year again and
Speaker 1: then everything fell apart because of the financial crisis. But
Speaker 1: that was one precedent. There's certainly no sign of the
Speaker 1: kind of ridiculous speculative activity going on in the economy
Speaker 1: now that there was then, and so less apparently risk
Speaker 1: of a really major accident resulting. So I don't think
Speaker 1: that's outlandish. I do think myself. And this is where
Speaker 1: I agree with J. Powell. It's just if I'm reading
Speaker 1: what he wants to do correctly, he should have said
Speaker 1: this louder and emphasized it more, or you do need
Speaker 1: to leave rates up there for a while. Otherwise you
Speaker 1: get into these logical self contradictions that you know that
Speaker 1: inflation will come down if rates stay high for a while,
Speaker 1: So why don't you preempt the rates coming down, with
Speaker 1: the result that inflation won't come down either. I therefore
Speaker 1: this I have more confidence about than the other things,
Speaker 1: unless there is a very much worse tumble into all
Speaker 1: out recession than currently seems likely. Because of course, the
Speaker 1: whole idea of a soft landing taking hold is because
Speaker 1: a lot of the data has suggested things are better
Speaker 1: than that's been fine. Yeah, then why would you reduce rates?
Speaker 1: They're historically not that high at all. There's still only
Speaker 1: just above inflation. Yeah, No, that's a great point. If
Speaker 1: something goes wrong, then they bring them down, as happened
Speaker 1: of course with Ben Banankey in dramatic style in two
Speaker 1: thousand and seven. But absent that, in which case you
Speaker 1: probably don't want to be holding stocks right now. Absently that,
Speaker 1: I think you expect to. I think one of my
Speaker 1: favorite economists predicted that the fit funds rate was going
Speaker 1: to grow roots at five and a quarter percent under Bernanke.
Speaker 1: And it did, and it wasn't that difficult to spot.
Speaker 1: There was just unless you have a clear reason to cut,
Speaker 1: you don't want to. And that's where I still think
Speaker 1: the market is wrong. But we will live in length.
Speaker 1: Bloomberg Opinions, John Author is there. We get more perspective
Speaker 1: on the central bank triple wammy this week in a
Speaker 1: moment from Mark Cranfield m Live Global strategist out of Singapore.
Speaker 1: You're listening to Bloomberg Opinion. I'm Vonnie Quinn. We get
Speaker 1: more perspective now on this week's central bank triple wammy.
Speaker 1: Here's Mark Cranfield m Live Global macro strategist out of Singapore.
Speaker 1: Mark Garfield Reynolds are Chief Asia Rates correspondent, talked about
Speaker 1: the fact that there actually might be a central bank
Speaker 1: put in the market again, that that might have been
Speaker 1: invited back this week. Do you agree with that interpretation.
Speaker 1: It's probably a bit strong, but it's certainly people are
Speaker 1: getting more confident that the major center banks that have
Speaker 1: fed with the inn CenTra Bank and the Bank of England,
Speaker 1: they get they themselves seem to believe that the inflation
Speaker 1: cycle is turning for the better, that is to say
Speaker 1: that inflation is falling, and they seem to be having
Speaker 1: a stronger conviction that that's the case. And obviously traders
Speaker 1: are taking heart from the one outlier, could be the
Speaker 1: Bank of Japan a lot with the pain and who
Speaker 1: has chosen as the next Bank of Japan chief And
Speaker 1: we probably know that in the next couple of weeks.
Speaker 1: But certainly as far as the Europeans, in the Americans
Speaker 1: concern that the center banks are acting much more favorably
Speaker 1: rewards risk assets than they were just a few months ago.
Speaker 1: And it was quite a surprise, particularly from the Federal
Speaker 1: Reserve right because we were anticipating that Powell would have
Speaker 1: to come out and at least school the market a
Speaker 1: little bit, if not out right slapped the market. Back,
Speaker 1: and he didn't. He actually said, you know, we're seeing
Speaker 1: some progress, and the market took it that way and rallied,
Speaker 1: I mean some of the industries rallied at least for once.
Speaker 1: It seemed like the market actually took him out his word. Yeah,
Speaker 1: I think he may regret using the word disinflation. I
Speaker 1: think that might be a bit premature, and that certainly
Speaker 1: sparked a lot of electivity in markets, particularly in the
Speaker 1: equity market. He could considering that the inflation numbers are
Speaker 1: still running something in the United States and it's been
Speaker 1: a gradual process of unwinding that and it's still the
Speaker 1: major issue for him to address. And he has also
Speaker 1: said that there's more rate heights to come, so he
Speaker 1: may be getting a little bit of head of himself
Speaker 1: there and he may have chosen better wording than that,
Speaker 1: And for the time being, it's got the market very excited.
Speaker 1: Of course, we've got lots of data coming up between
Speaker 1: now and the next meetings, so it's not going to
Speaker 1: be one way traffic by any means. There's going to
Speaker 1: be some bumps along the road, and we're going to
Speaker 1: hear more from other Fate speakers as well. They could
Speaker 1: push back. Some of the more hawkish members of the
Speaker 1: Federal Reserve, they want to push against that a little bit.
Speaker 1: They don't want markets getting overconfident. Before I said, has
Speaker 1: really finished their job of getting weights to where they
Speaker 1: want them to. Well, interestingly, we had a couple of
Speaker 1: high profile people signal this in advance. So we had
Speaker 1: Paul Krueman saying, you don't want to give any room
Speaker 1: for inflation to come roaring back. We had muhammadil Area
Speaker 1: and at some point also talking about how this is
Speaker 1: a time where the fat has to be very, very
Speaker 1: very careful. It really didn't seem like Powell was being
Speaker 1: that careful the other day. I think that that probably
Speaker 1: tells you more about who trades us listening to than
Speaker 1: anything else. I think, with all due respect to those
Speaker 1: kinds of pundits, I think traders have learned, especially during
Speaker 1: the process of the past couple of years and trying
Speaker 1: to train inflation, as far as that they is concerned,
Speaker 1: there's only really one band accounts. That's your own power,
Speaker 1: and you have to listen to what he says and
Speaker 1: look at what he does. And equally in other central
Speaker 1: branks as well, I think people have realized that you
Speaker 1: have to take the head of the central bank, and
Speaker 1: your senior people take them much more seriously and give
Speaker 1: a lot more weight to what they have to say
Speaker 1: than any outside voices. You may come across the ten
Speaker 1: Your yield dropped a below three forty from above three fifty,
Speaker 1: and we saw some other moves across the curve as well.
Speaker 1: Is there any chance that the third is a little
Speaker 1: concerned about recession, that that's why we're seeing lower rates.
Speaker 1: That's traders. That's not the face ye curve that you
Speaker 1: see his traders hedging, and it's not a particularly expensive
Speaker 1: way of doing it. So if you think that the
Speaker 1: fad is not going to be able to achieve a
Speaker 1: soft landing, if it's going to be more like a
Speaker 1: hard landing, the traders to take a defensive position through
Speaker 1: the yield curve is not too bad, particularly through derivative space.
Speaker 1: You can do that without a huge cost, especially if
Speaker 1: you're hedging it, say by being long equities or short
Speaker 1: the US do as well. So if you don't want
Speaker 1: a portfolio approach, it's not too bad. So really, what
Speaker 1: that's telling you is there's a number of people who've
Speaker 1: got portfolio bets as a kind of insurance in case
Speaker 1: the FED has made a mistake. I think we'll see
Speaker 1: that to get brantually get unwound, because I think one
Speaker 1: thing you can rely on is that when the FAID
Speaker 1: tell you they want to hold short term interest rates
Speaker 1: high for a long period, that is probably exactly what
Speaker 1: they need. So even if whether they stop rates at
Speaker 1: five percent or five and a half percent, once they
Speaker 1: get there, they don't plan to drop rates. I think
Speaker 1: that is the part which is probably the market has
Speaker 1: probably got wrong, is that there's going to be a
Speaker 1: rate cup this year. That's extremely unlikely. That process will
Speaker 1: slowly come out of the market. It's not going to
Speaker 1: come out all in a rush, because we've got a
Speaker 1: few head meetings to come, and gradually people will realize
Speaker 1: they can take the said that their words, they're going
Speaker 1: to hold rates. From where you stand right now, how
Speaker 1: long would the third have to hold rates for? Is
Speaker 1: it possible to even prognosticate? I think they intend to
Speaker 1: do it for the rest of this year, at least
Speaker 1: that is their aim. But we've seen in the party
Speaker 1: look previous cycles, particularly say for example, after the Internet
Speaker 1: double burst in the early two thousands, but took quite
Speaker 1: a while before they changed their hill rates for a
Speaker 1: long time. Then they finally moved about a year after
Speaker 1: the bubble burst. But when they did start to move,
Speaker 1: they cut rights quite quickly, and there was a series
Speaker 1: of weight cuts. So that probably means that if the
Speaker 1: equality er performs, if we do get the kind of
Speaker 1: hard slowdown which is possible, or we get a slowdown
Speaker 1: which that they thinks is too extreme, and maybe in
Speaker 1: the first quarture of next year, you'll start to see
Speaker 1: the rates coming down, and when they do, they'll probably
Speaker 1: be a succession as they cut after that. Mark. Did
Speaker 1: you find it odd that when Powell was asked about
Speaker 1: the discussion around the pause, that he wouldn't go into detail,
Speaker 1: but that he teased the minutes. He said, the minutes
Speaker 1: coming out in three weeks will tell you a lot more.
Speaker 1: Why make traders and investors wait for the minutes to
Speaker 1: hear more about the pause? Why not talk about it
Speaker 1: this week? He probably wants to make sure that he
Speaker 1: doesn't give any wrong impression that people can suddenly jump upon.
Speaker 1: There is probably a consensus has probably formed within the
Speaker 1: Federal Reserve, and he probably wants to make sure that
Speaker 1: everybody is on the same page. Exactly what that kind
Speaker 1: of sense as if the other wants a front run
Speaker 1: any opinions on that, and he doesn't. He knows that
Speaker 1: when he's when he speaks in public, there's always the
Speaker 1: risk of people misinterpreting what he has to say. Is
Speaker 1: particularly when the headlines are triggered that are then read
Speaker 1: by AI machines and by other trading systems, which will
Speaker 1: immediately react to certain words in headlines. So if he
Speaker 1: sends out something that has the word pausing it, you
Speaker 1: can probably think of an extreme reaction in markets, which
Speaker 1: he doesn't want to see. He wants people to see
Speaker 1: the full message, not just one or two words. He
Speaker 1: wants them to understand if the fact I've had the
Speaker 1: full discussion on a pause, he wants you to know
Speaker 1: exactly what that discussion was. That's such an interesting point. Finally,
Speaker 1: anything surprising to you out of the e c B
Speaker 1: or b E. I think if it was a surprise,
Speaker 1: it was that the ECB was able to be so
Speaker 1: clear on what they said more or less told you
Speaker 1: that for the next meeting, they're very confident they're going
Speaker 1: to raise rates fifty basis points again, which is unusual
Speaker 1: to project that far. Into the future and they've given
Speaker 1: markets certainly a reasonable hint that that there could be
Speaker 1: the last one in the series. The Bank of England
Speaker 1: also seems to have given very good guidance that they're
Speaker 1: very close to finishing. They possibly have finished with great
Speaker 1: heights as well. That's a lot more than central banks
Speaker 1: have been telling us for some times. So that's why
Speaker 1: you've seen a strong reaction. For examples, you look in
Speaker 1: the French change market. The euro is very strong against
Speaker 1: the pound because people are now assuming that the rate
Speaker 1: differential between euro yields and spelling years could narrow quite
Speaker 1: significantly over the next few months. That's probably not something
Speaker 1: that people expected before. This week and Live micro strategist
Speaker 1: Mark Cranfield, they're out of Singapore statues and Shulei Wren
Speaker 1: joins next on the incredible story of a Donnie Group
Speaker 1: fighting the short seller. This is Bloomberg Opinion. You're listening
Speaker 1: to Bloomberg Opinion. I'm Vonnie Quinn. Now to the incredible
Speaker 1: story of Hindenburg Research versus the Indian industrialist tycoon. Go
Speaker 1: to Madonnie's a Donni Group. Over the course of a
Speaker 1: handful of trading sessions, Hindenburgh's allegations that a Donnie Group
Speaker 1: is pulling off the largest Cohn incorporate history percolated through
Speaker 1: markets and caused a Donnie Group shares and bonds to
Speaker 1: take a severe tumble Bloomberg opinions. Shuli ran As followed
Speaker 1: Asia nation builders for some time, as well as the
Speaker 1: dollar bond traders they tend to attract. She joined for
Speaker 1: some perspective. So, Shuli, this is an insane story and
Speaker 1: it's picked up steam. First of all, tell us how
Speaker 1: much does a Dannie Enterprises depend on outside investors? Quite
Speaker 1: a bit? Surprisingly so, Adannie has been very good at
Speaker 1: having on two global investors well their industrial adventure. For instance,
Speaker 1: they're doing a lot of in energy stuff like going
Speaker 1: hydrogen so and so forth. So over the years, about
Speaker 1: thirty percent of Adanni's financing is denominated in foreign currencies.
Speaker 1: They have borrowed extensively on the dollar bank market. They
Speaker 1: have also thought something from foreign banks in their overseas expansion.
Speaker 1: So quite a bit. At first glance, it didn't seem
Speaker 1: like this was going to hurt Adanni too much, this
Speaker 1: Hindenburgh research report. Perhaps the Adanni Enterprises group was too
Speaker 1: big for something like this to actually have an impact.
Speaker 1: Now it seems like it might actually succeed. Adani had
Speaker 1: to pull a share sale for example, explained to us
Speaker 1: what you see going on? To be honest, I was
Speaker 1: very surprised because I have been covering, you know, Chinese
Speaker 1: conglomerates for a decade as a journalist and then what
Speaker 1: we've seen, which China's h and a group unbound and
Speaker 1: kinda ever ground group. Yeah, like all these companies they
Speaker 1: had a received their short sellers reports for years, right,
Speaker 1: they didn't humble. The only humble that when the political
Speaker 1: wind in Beijing change, you know, like when China decided
Speaker 1: to crack down on private enterprises that did a lot
Speaker 1: of overseas skills a China fell in one when China
Speaker 1: was doing the real estate developer cracked China Evergrand group here.
Speaker 1: So I was, to be honest, very surprised. And I
Speaker 1: will have to say that it says something about the
Speaker 1: Indian market as a capital market. I mean, China is
Speaker 1: very opaque. Foreign investors basically play the Beijing's game, right,
Speaker 1: They basically play along with Beijing's political agenda, where it
Speaker 1: seems they have more sway when it comes to Indian companies,
Speaker 1: so I was quite surprised. And also adone has quite
Speaker 1: a bit of oversees something I'm talking about thirty percent. Now,
Speaker 1: how similar is the Adani story to the likes of
Speaker 1: China Evergrand other companies like that. It's not really a
Speaker 1: public company, but we're seeing a different public market reaction. Yeah,
Speaker 1: it's interesting because in many ways they're very similar. Right.
Speaker 1: They're very heavy leverage, thether conglomerates using perhaps one cash
Speaker 1: called subsidiary to fund new business ventures of other business arms.
Speaker 1: So it's one humble the others work for as well.
Speaker 1: They are also very much family one, right, Like of
Speaker 1: the shares are held by company insiders, brothers, sisters, everyone
Speaker 1: is in it. So in many ways they are very similar.
Speaker 1: But I think Adani is a bit more international than
Speaker 1: the Chinese ones in that, you know, like they have
Speaker 1: received funding from everyone. And also Dani, believe it not
Speaker 1: before the Hindenberg report is do investment grade. Their dollar
Speaker 1: bombs are all rated as investment grades, whereas the Chinese
Speaker 1: ones they were always high yled. So whenever there is
Speaker 1: a little bit of a gendering I imagine investment grade
Speaker 1: funds they will panic a little bit more right, high
Speaker 1: yold traders, they always knew what they were going to.
Speaker 1: Whereas if you have very blue chip as a managers
Speaker 1: that were made by into bombs that have very little risk,
Speaker 1: if they see this kind of headlines they were thought
Speaker 1: to sell. We'll see how long that last. Because bonds
Speaker 1: of the Flagship and Danni enterprises have plunged now to
Speaker 1: the stress levels for different ports bonds hit distress levels
Speaker 1: this week. Green Energy bonds also declined. They didn't reach
Speaker 1: the stress level, but they're not far off it, so
Speaker 1: we'll see how long those ratings last. How much has
Speaker 1: got a Madani himself concerned right now? Is there something
Speaker 1: that the Indian administration can do? Will he be calling
Speaker 1: Prime Minister Modi? For example? They are very well known
Speaker 1: to be literally close, although Alarney has said that that
Speaker 1: he has not received any favors from from the Modi government.
Speaker 1: I mean he has to be very very worried because
Speaker 1: his whole business endeavor depends on funding. He's trying to
Speaker 1: grow his business on many funds, right, ports, airports, green Hydrogen,
Speaker 1: all of them need money, so was their funding channel thoughts.
Speaker 1: He's in big trouble, so I think he has to
Speaker 1: be very worried right now. And going back to the
Speaker 1: bunk issue, if you look at all these ADONNEI dollarbams
Speaker 1: sports to bring energy to the Mumbai subsidiary, they're all
Speaker 1: investment grade. So if one of the rating agencies found
Speaker 1: grade into high yield, Adanni will be a fallen angel.
Speaker 1: And then we're no longer talking about three to five
Speaker 1: percent something because we're talking about a ten percent. So
Speaker 1: he has to be very, very worried right now. Surely
Speaker 1: why our investors pulling out? It's likely that there are
Speaker 1: some extraordinarily valid statements in the Hindenburg research report. At
Speaker 1: the same time, we all know how some of these
Speaker 1: companies operate in markets like India's. Were investors concerned that
Speaker 1: this would pick up steam? What would make themselves? I
Speaker 1: think they're true conferent investors were talking about for instance,
Speaker 1: overnight we saw the news clip about Norwegian solving from
Speaker 1: they actually were always under way Adani because they just
Speaker 1: didn't feel very good about it. I mean a lot
Speaker 1: of Adonis foreign investors. They are yes, chief fund because
Speaker 1: he is doing the green energy evening right, That's why
Speaker 1: they're bodying. But yes, chief funds are very worried when
Speaker 1: they are this kind of global headlines accusing Adanni of
Speaker 1: disball corporate governments, because yes, she is not just environmental,
Speaker 1: it's also governments, so they can be very worried. And
Speaker 1: an another thing is going back to investment Gray Thompson.
Speaker 1: As soon as Aganis bounds are downgraded into high yells,
Speaker 1: they have to sell because it's their funds mandate, right,
Speaker 1: So there's probably some concern that that's going to happen
Speaker 1: soon and they want out before that happens. Now, a
Speaker 1: share offering was also pulled. It was a two and
Speaker 1: a half billion dollar share offering that Adanni says was
Speaker 1: fully subscribed. It was a fascinating week because Jeffreys was
Speaker 1: part of the underwriting syndicate. So there was some speculation
Speaker 1: that if Jefferies did its due diligence, particularly after this report,
Speaker 1: that Jeffreys would have to pull out before any of
Speaker 1: that may or may not have happened. Adannie pulled the
Speaker 1: share sale. Why pulled the share sale if it was
Speaker 1: fully subscribed thanks to some Indian and golf investors, According
Speaker 1: to a Dannie, So I did some reporting on my
Speaker 1: end and here's what I heard, Like your true series
Speaker 1: right once. That's the more damaging one is that Danny
Speaker 1: didn't even have one billion dollars to buy up this
Speaker 1: year himself. I mean, the whole sear sal it's only
Speaker 1: two point five billion. One point five billion was already
Speaker 1: subscribed by investors from a middle US et cetera. Right,
Speaker 1: so he just needs another billion. So that's the more
Speaker 1: damaging theory. But what I heard on the street is that,
Speaker 1: you know, like the years there was at over three
Speaker 1: thousand rubies per share, and then the actual market price
Speaker 1: is at true Thouland, it's one third bid old below
Speaker 1: what Danni is asking investors to buying it. So they
Speaker 1: probably just didn't want to, you know, cause troubles down
Speaker 1: the road that they don't want to have discruntled investors
Speaker 1: saying why am I buying these shares at pre Tholand
Speaker 1: will be a piece when in the marketplace I can
Speaker 1: buy for two thousand, So that's why they pulled. Wow. Now,
Speaker 1: India's massive country. Obviously a lot of this infrastructure is
Speaker 1: needed and we'll get built at some point. Is there
Speaker 1: a better way? I mean, somebody like Dannie comes along
Speaker 1: and decides he's going to do it all, isn't there
Speaker 1: political support for that because at the end of the day,
Speaker 1: it helps GDP growth. It needs to get done anyway,
Speaker 1: somebody needs to take the reins. Why would short seller's report,
Speaker 1: even if the shares are overvalued, even if there's all
Speaker 1: sorts of opaque subsidiaries and so on, why would that
Speaker 1: really matter in India? Well, I think it was a
Speaker 1: part of India's world story. I'm still seeing what happened
Speaker 1: to China. You know, global investors just lots a little
Speaker 1: bit face engaging and still actually fleeing through India, which
Speaker 1: also has one point for billion population, but it's population
Speaker 1: is younger and it's future prospects that brighter. Right, And
Speaker 1: then I think that right question to us is is
Speaker 1: there a better way to buy into India's growth stories
Speaker 1: other than any Yeah? Is there? Um? I think unfortunately
Speaker 1: it is not, Yes, not for now? Right? So what
Speaker 1: do investors do or what does India do? More importantly,
Speaker 1: I don't know. That's a really good question. I think
Speaker 1: the problem with India is that the growth potential is
Speaker 1: all there, but the valuation is just very expensive. Adoni,
Speaker 1: of course is an extreme case, but if you look
Speaker 1: at everywhere, you know, the Indian banks are way more
Speaker 1: expensive than the Chinese ones, and you can say, well,
Speaker 1: how about their that long exposure? What if the likes
Speaker 1: of Adoni blows what they will be also saddled with that?
Speaker 1: Why are they training at three or four times book
Speaker 1: value when the Chinese ones are trading at zero point five? Yes? Right,
Speaker 1: So I think the India's problem is its valuation. And
Speaker 1: in a way, if you're buying to India, you're kind
Speaker 1: of buying to an option, a core option, which fundamentally
Speaker 1: it's just very volived her. Surely, is it possible that
Speaker 1: there's all backfires eventually on the Moody administration or is
Speaker 1: it shielded from anything that happens with a large conglomerate.
Speaker 1: I think a point kids showed it right. He just
Speaker 1: needs to stay on the sidelines and see how it's
Speaker 1: going to unfold. I mean, of course the opposition party
Speaker 1: will point to his relationship with Adami, but so far
Speaker 1: he's showed it. And if you look at his budget,
Speaker 1: he's trying to cater to India's rising middle class. We're
Speaker 1: talking about over four hundred million people here. I think
Speaker 1: politically he is quite well established. Will he drop a
Speaker 1: Dannie if necessary? That's a very good question. I mean
Speaker 1: they found experience in China. I mean the Chinese government
Speaker 1: doesn't care what global investors have to say, right, Like,
Speaker 1: going by the China experience, he wouldn't care that India
Speaker 1: could be different. I mean Americans that are still India's
Speaker 1: biggest customers. Right. The Mouldi Lady in India dream has
Speaker 1: to be funded by a lot of U S dollars,
Speaker 1: so maybe he might. One of the Boomberg opinion editorials
Speaker 1: pointed out this week that if Dannie hadn't existed, India
Speaker 1: would have to invent him. Who or what would replace
Speaker 1: Adanni if somehow this ends up bringing him down or
Speaker 1: bringing part of his enterprise down, So it would be
Speaker 1: another entrepreneur who's willing to fast track India's industrial world
Speaker 1: like Adoni. It's not a Danny Pusson, but it has
Speaker 1: to be a private entrepreneur. I Thinkia works quite differently
Speaker 1: from China. I mean China's infrastructure spending, a lot of
Speaker 1: it is public money, right, But India still realize a
Speaker 1: lot on the private sectors. So somebody else who is
Speaker 1: ambitious fast charging will come and do what Adoni cannot finish.
Speaker 1: Couldn't done get help from the market. So if there
Speaker 1: was a re raising or a revaluation of his enterprises,
Speaker 1: would that help him eventually. I think there's just a
Speaker 1: lot of interesting Adonis funding stock right now, especially with
Speaker 1: the dollar bums. But it's not what I heard from,
Speaker 1: you know, dollar bound traders. A lot of them were
Speaker 1: looking like that. You can see the flow from brokerages.
Speaker 1: They were saying that so called real money funds have
Speaker 1: been selling. Basically those long only investment grade SM managers.
Speaker 1: They've been selling for a couple of days because they
Speaker 1: were very worried, right Swedish. But while the hedge funds
Speaker 1: have been buying, they just think it's a really good deal.
Speaker 1: You know, if Adani is trading avery, say sixty cents
Speaker 1: a dollar, maybe they just don't see that it will
Speaker 1: fail completely. So this is a very interesting jostle. On
Speaker 1: the one hand that there are new trip funds that
Speaker 1: are worried about s G. On the other hand, there
Speaker 1: are more risks youking, hedge funds looking to make them
Speaker 1: quick returns. And that's why you see the bandmarkets. They're
Speaker 1: very bullet high, can trade up and down twenty points daily.
Speaker 1: That's fascinating, and Trulie, did anything jump out at you
Speaker 1: from the Handenburg research report that it would be very
Speaker 1: easy to prove or that seems correct? I think to
Speaker 1: me the accusation about some manupulation is correct because they
Speaker 1: were saying, basically, according to the Indian security law, if
Speaker 1: you have insiders holding more than seventy of a company stock,
Speaker 1: that stock has to be delisted because there's two little
Speaker 1: publetful and it's too easy for stomb lint relation. So
Speaker 1: what Hindenburgh said is that adam l insiders used opaid
Speaker 1: overseas financing vehicles to buying to Adonisius a hundred percent
Speaker 1: of fun buying too Admi sious, which seems to me
Speaker 1: pretty unlikely. You wouldn't put a hundred percent of your
Speaker 1: money into this one stock, right, So to me, that's
Speaker 1: quite believable. Surely have we ever seen something like this
Speaker 1: before where a short seller, you know, Hindenberg Research in
Speaker 1: this case, a pretty small shop takes on basically an
Speaker 1: entire nation's growth story. No, I haven't, hinden there is
Speaker 1: quite an amazing company. I mean, it is only five
Speaker 1: year old that it's found that it's not even forty
Speaker 1: years old and it is quite amazing. Bloomberg Opinions Shui Wren.
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