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Emerging Markets ETFs to Stay Away From On Adani Crisis
Gautam Adani, an Indian business tycoon and one of the richest people in the world, has been probably one of the most-typed words in the corporate world. This is because shares of companies owned by his Adani Group nosedived after the publication of a report by a U.S. short seller in late January. Specifically, a report from Hindenburg Research resulted in more than $100 billion crash in Adani stock prices in just 10 days.
His wealth has been cut by more than half and he is out of the top 20 ranks at Bloomberg Billionaire Index. Adani operates in areas like power transmission, green energy and port operation. But Nathan Anderson, founder of Hindenburg Research, released a report on Jan 24 accusing the Adani Group of “stock manipulation and accounting fraud,” as quoted on The Wall Steet Journal.
Anderson claimed the Adani Group uses a number of shell companies to blow up stock prices and disobey India’s shareholding rules, which require at least 25% of most listed companies to be held by the public.
He also raised concerns about Adani Group’s heavy debt burden and overvalued share prices. Moreover, since Adani group is overleveraged, Credit Suisse, Citigroup and Standard Chartered stopped accepting Adani dollar bonds as collateral on margin loans.
Hindenburg has a good track record about short-selling Nikola shares. The Research house also issued report on Elon Musk’s deal to buy Twitter. The Adani stock crash is sending shockwaves across India investing, with global investors worrying about the threat that the Adani crisis may pose to India's financial stability.
Hence, it is better to stay away from the broad-based India investing at the current level. Emerging markets (EM) have been showing upbeat trends this year. Thus, emerging market investors may avoid or closely watch EM ETFs that have considerable exposure to India.
Below we highlight a few emerging markets ETFs that have high exposure to India.
India-Heavy Emerging Markets ETFs in Focus
Columbia EM Core ex-China ETF (XCEM - Free Report) – 15.24% of the basket invested in India
SPDR S&P Emerging Asia Pacific ETF (GMF - Free Report) – 14.98%
KraneShares MSCI Emerging Markets ex China Index ETF (KEMX - Free Report) – 13.3%
SPDR Portfolio Emerging Markets ETF (SPEM - Free Report) – 11.6%
SPDR MSCI Emerging Markets StrategicFactors ETF (QEMM - Free Report) – 12.65%
First Trust Dorsey Wright International Focus 5 ETF (IFV - Free Report) – 13.17%
iShares ESG MSCI EM Leaders ETF (LDEM - Free Report) – 11.84%