JPMorgan Dumps Adani Group Stocks From Its ESG Funds

Gautam Adani was once the world’s seventh-richest person, but a short-seller attack triggered a massive wave of selling in Adani Group stocks last month. The Indian tycoon has since lost $80 billion in personal wealth, slipping to No.30 on the Bloomberg billionaire index. 

Adani’s empire, which spans from seaports to airports, commodities, energy, cement, and data centers, can’t catch a break as the fallout from Hindenburg Research’s short report forced the asset management unit of JPMorgan Chase & Co. to dump Adani stocks from its ESG portfolios, Bloomberg reported.

JPM’s Adani purge from ESG funds was revealed through data analysis of the investment firm’s funds: 

The JPMorgan Global Emerging Markets Research Enhanced Index Equity ESG UCITS ETF (ticker: JREM LN) offloaded more than 70,000 shares in cement manufacturer ACC Ltd., exiting a stake it’s held since May 2021, according to a data review by Bloomberg that looked at movements following the Jan. 24 publication of the Hindenburg report.

 A second fund, the JPMorgan AC Asia Pacific ex Japan Research Enhanced Index Equity ESG UCITS ETF (ticker: JREA LN), sold the roughly 1,350 shares it had held in the company since July last year, the data show. The moves mean JPMorgan, which had held 0.04% in ACC, now has no further exposure to any parts of the Adani conglomerate via ESG funds, according to Bloomberg data.

Meanwhile, BlackRock Inc. and the investment unit of Deutsche Bank AG, DWS Group, have yet to make any moves with their Adani stakes in ESG funds. 

A DWS spokesperson told Bloomberg that regarding its MSCI-tracking ETFs, “no proprietary DWS ESG assessment is used.” MSCI told Bloomberg that a review of its ESG index “will be implemented” at the end of March. The index firm has yet to alter Adani ESG ratings. 

Both JPM funds are registered as Article 8 under European rules. This means they must “promote” ESG goals. Bloomberg noted JPM still holds Adani stocks in non-ESG funds. 

Adani stocks are becoming too toxic for some funds to hold, having lost $154 billion in combined market cap since the damning report of alleged fraud and market manipulation last month. Adani Group lawyers have rejected the allegations.  

Tim Buckley, director at Australian think tank Climate Energy Finance, told Bloomberg that the losses are an “absolute failure” on regulators and index providers. He said regulators need to monitor for “the biggest systemic risks, and to me, one of the big systemic risks is the index funds and the lack of clarity and regulatory definition.” 

Most of Adani’s stocks fell on Monday, led by a 10% decline in Adani Enterprises. 

Adani bonds in distressed territory. 

… and Indian stocks (S&P BSE Sensex) hit a four-month low. 

The continued selling came as Adani Group embarked on an investor roadshow to regain the confidence of institutional investors. Gautam Adani is expected to meet with investors at the Barclays Plc office in Hong Kong on Tuesday and Wednesday.