There is “very high probability of these Adani names to come in the index primarily due to the surge in their market capitalization,” Brian Freitas, a New Zealand-based analyst at Smartkarma, said by phone. “ETFs and other passive funds will have to buy, adding to Adani’s fortune.”
Passive funds may have to buy shares worth about $830 million in total in the three companies
after their inclusion, according to calculations by Freitas. Still, these stocks “trade much much higher than their global peers and longer-term returns may not be worth the risks involved,” he wrote in a note Wednesday.
Meanwhile, S&P Dow Jones Indices said in a statement Monday that it will remove Adani Ports and Special Economic Zone from the Dow Jones Sustainability Indexes because of links to Myanmar military.
A lack of analyst coverage for many of the Adani group’s companies
hasn’t deterred MSCI from adding their stocks as the index provider’s focus is more on other factors such as market value. Adani Green, which was added to the MSCI India gauge end-November, still has no analysts covering it, according to data compiled by Bloomberg.
MSCI is set to declare the results of its latest review on May 11 and changes will be effective from close of trading on May 28, according to an announcement by the index provider in February.
“We do not comment on market speculation on index changes,” a spokeswoman for MSCI wrote in an emailed response.
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