Global index provider MSCI said it will postpone the reduction of weightages of two Adani group companies namely Adani Total Gas and Adani Transmission to its next index review in May.
On February 8, 2023, MSCI had suggested that it will update the foreign inclusion factors (FIFs) of specific securities associated with the Adani Group as part of the February 2023 index review following a free float review.
The implementation of February 8 updates to the foreign inclusion factors (FIFs) for Adani Total Gas and Adani Transmission has been postponed to May 2023 index review, MSCI said.
“In the light of potential replicability issues due to impact from price limit mechanisms in specific securities associated with the Adani Group, MSCI will postpone the implementation of such previously announced updates to the FIFs,” MSCI said.
The reversal of the updates to the two securities in the February 2023 index review will be reflected in the MSCI Index Product files starting from February 16, 2023, MSCI said.
“Additionally, in light of potential replicability issues as well as ongoing uncertainty with relation to key input data for index construction for the Adani Group’s associated securities, MSCI will apply a special treatment for all Adani Group’s associated securities in the MSCI Equity Indexes starting from the February 2023 Index Review,” MSCI said.
Accordingly, MSCI will not implement any changes whether it is additions or deletions, constraint factor changes in non-market capitalisation weighted indices and custom indices such as the MSCI Factor, ESG, Thematic and Capped Indexes for any of the below securities, it said.
On February 8, 2023, MSCI announced that it will update the Foreign Inclusion Factors (FIFs) of specific securities associated with the Adani Group as part of the February 2023 Index Review following a free float review.
The implementation of such changes for the above mentioned securities in non-market capitalisation weighted indices and custom indices will resume at the May 2023 Index Review, MSCI said.
“Note that if as a result of not implementing a constraint factor change on any of the above mentioned securities in the MSCI 10/40, MSCI 25/50 or MSCI 35/65 Indexes, the indexes would not be compliant with the concentration constraints described in these index methodologies, the constraint factor change will be implemented regardless of the special treatment mentioned above,” it said.
Until otherwise announced, MSCI said it will review the treatment of non-neutral corporate events for the affected securities on a case-by-case basis and potentially defer their implementation.
The treatment of any such non-neutral corporate event would be announced to all clients with advance notice through regular index announcements, it said.
“For the avoidance of doubt, MSCI will continue implementing any neutral corporate events including ones requiring application of a Price Adjustment Factor (PAF). MSCI continues to monitor information that may impact the eligibility of the relevant securities for the MSCI Global Investable Market Indexes or estimates of their free float,” MSCI said.
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