Mark Mobius: Modi can't be blamed for what’s happening with Adani

Mark Mobius said he has stayed away from investing in Adani group's stocks because of the high debt. In general, he advises investors to stay away from infrastructure companies.

Emerging market guru and veteran investor Mark Mobius sees minimal political impact from the Adani-Hindenburg fiasco.

“Many think the Adani situation will upset India’s politics and Prime Minister Modi will be blamed for what happened. I don’t believe that will be the case as there is lack of evidence,” the founder of Mobius Capital Partners said in an interview with Moneycontrol.

The reforms being put in place by the Modi government to benefit the Indian economy will easily outweigh the Adani risks. “So, the political impact will be minor,” he explained.

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On January 24, US-based Hindenburg Research accused the Adani Group of ‘accounting fraud and stock manipulation’, following which Opposition political parties pointed fingers on the NDA-led government. Meanwhile, several banks have come out with statements clarifying that they have low exposure to Adani loans.

According to Mobius, Hindenburg’s accusations against the conglomerate will have insignificant impact not only on the political landscape but on equity markets as well.

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“Adani companies account for only 6 percent of the index. I don’t think this issue is going to have an impact on what people think about India. At the end of the day, you are not buying the index, you are buying individual companies,” he said.

That said, he has stayed away from investing in them because of the high debt. In general, he advises investors to stay away from infrastructure companies.

“These (infra) companies borrow heavily to finance projects that earn generate no money in the short-term during construction phase. On the flip side, the interest on the loans grows at a fast pace,” Mobius said.