On January 24, 2023, the infamous short seller Nathan Andersen’s Hindenburg Research issued a report attacking the Adani Group as though the Adani Group were the equal, parallel, and abbreviation of the Indian economy.
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The study was riddled with misleading and ambiguous claims ranging from conspiracy theories to stock manipulation, accounting fraud, and worries about the group’s debt and valuations. This news caused the Adani Group’s shares to lose Rs 4 lakh crores in market capitalization in two days.
The Hindenburg report was released immediately before Adani’s largest-ever public offering to damage Adani Group’s primary firm, Adani Enterprises Ltd. As a result, even though the objective was the Adani Group, the stock market suffered a massacre and a significant bearish collapse, with many top 500 firms finishing in the red.
For two days in a row, the market indexes bled heavily. Along with it, the Indian stock markets lost their dominant position in the world’s top five equity markets. In other words, the attack on Adani had a significant influence on the entire equities markets and the values of many other well-known corporations and banks.
This research was meant to raise suspicions and throw doubt on the integrity of Indian corporations, and hence on the Indian economy, consequently impeding Indian companies’ financing prospects and alternatives.
Short-sellers have vested interests
Nathan Andersen has a shady reputation for loosely targeting a variety of businesses. Hindenburg has already been chastised in US courts for being a defamed and nearly banned organisation in the United States.
A legal ruling issued by the Court of the Southern District of New York in January 2023 granted DraftKings’ move to dismiss a class action arising from a 2021 short-seller report. The Court identified two flaws in the Hindenburg study and Hindenburg’s charges against DraftKings.
First and foremost, the Hindenburg Report was a short-selling report. The Judge ruled that “allegations must be viewed with care” given a short seller’s incentive in seeing a stock price fall. Second, there were the report’s secret sources.
Due to the plaintiffs’ attorneys’ inability to verify and examine the report’s sources, the Court reprimanded and discounted the report. This backdrop is enough to cast suspicion on Nathan Andersen and Hindenburg Research’s claim.
Nonetheless, a part of the media and political establishment in India regarded the Hindenburg report as the pinnacle of legitimacy and unmistakable truth. Short sellers in the market had a field day attacking many other recognised and respected significant firms and respectable institutions as a result of the aforementioned article.
In other words, it evolved into a simultaneous assault on Indian markets and the Indian economy. It was a foreshadowing of the BBC’s vicious and disparaging story on Prime Minister Modi two weeks ago. Yet, if we look back through time, this is not an isolated instance. The Indian economy and corporations have been repeatedly targeted by entrenched interests both in India and overseas.
The types of assaults vary. Starting with environmental activists, it progressed to rioters and vandals, and now we’re seeing sophisticated financial assaults. This worldwide bear cartel onslaught reminds us of George Soros’ attack on the Bank of England in 1992 when he shorted the Pound Sterling and earned US$ 1 billion by damaging the Bank of England.
The Malaysian government then accused Soros of damaging and harming the Malaysian economy with enormous currency speculation in Ringgit in 1997. This type of financial market manipulation and deliberate targeting of firms, currencies, and, ultimately, economies is nothing new. For the first time, global forces have targeted Indian enterprises and markets.
We have witnessed attacks of a different kind against Indian firms and the Indian economy. First, Anil Agarwal’s Sterlite Industries Ltd’s copper smelter in Tuticorin was targeted by this worldwide lobby through environmentalists.
Under bogus charges of environmental harm and employing street force, they constructed a negative narrative about Sterlite and pushed the smelter to close. As a result, India became a net importer of copper in 2018-19, for the first time in 18 years, after being a net exporter of copper in 2017-18, exporting 3,35,000 MT.
How did it turn out?
China, which had a large copper hoard, was able to offload its stagnant stockpile. Consider the loss to India! It was later discovered that the smelter was not polluting the environment. The most alarming finding was that China sponsored the entire Sterlite protest by using a UK-based NGO called “Foil Vedanta” as a front to target Indian firms and the economy.
As if it wasn’t enough, during farmer rallies, rioters disguised as anti-farm law campaigners have targeted Reliance JIO’s cellphone towers. The reason is that the Indian government barred Chinese 5G providers and instead favoured Reliance.
Farmers were so misled and abused to launch an attack against Reliance JIO and its operating assets in Punjab. Even a child may deduce that the assaults were carried out solely to prevent Reliance JIO from proceeding with its 5G ambitions, which would have created stiff competition for Chinese 5G vendors like Huawei and ZTE.
Later, India was subjected to targeted attacks by a select group of environmentalists on Mumbai’s crucial infrastructure project, the Mumbai Metro. The Japanese organisation JICA is funding this initiative. The environmentalists’ lobby succeeded in delaying the construction of the Metro Car Shed by inventing a false dispute around Aarey.
The delay cost the Maharashtra state around Rs 10,000 crore. The movement to halt the metro car shed project was financed, according to Maharashtra’s Deputy Chief Minister Devendra Fadnavis. The sponsors were able to enlist politicians such as Shiv Sena chief’s son Aditya Thackeray and Bollywood personalities to mislead and unite people behind them to block the project and harm the state’s economy.
These incidents just serve to demonstrate how easy it is to attack the Indian economy in an open and linked world. This is part of fifth-generation warfare, in which hostile states deploy numerous indirect techniques to assault the Indian economy.
Some assets, such as rioters in farmer demonstrations or environmental activists, are crude and naive operators, but others, such as Hindenburg and George Soros, are sleek and highly competent subject specialists. India is increasingly booming economically and spreading its wings to get control of crucial infrastructure assets in other countries.
It is also aiming to undermine the supremacy of the US Dollar by boosting UPI and Rupee trading.
Moreover, India has not succumbed to Western coercion and has maintained trading with Russia by importing Ural Crude and settling deals in Indian Rupees and other non-Dollar currencies.
In such a case, India must be well prepared to face many more such strikes. Following the Adani case, India must develop new measures to protect its healthy economy while also developing the capacity to not just defend markets against attacks but also to apprehend and prosecute such financial criminals. This is critical so that we can build a safety net around our economy and markets.
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