Morgans downgrades GQG Partners after Adani scandal
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The news: Morgans has downgraded GQG Partners after the fund manager said it was reviewing its investments in Adani Group, whose chair Gautum Adami was charged by US prosecutors over an alleged USD250 million ($383.6 million) bribe.
The numbers: Morgans lowered its rating on GQG from 'add' to 'hold' and cut its 12-month target price from $3.10 to $2.47.
The Florida-based firm said on Friday it would purchase up to $100 million worth of its ASX-listed securities, which had lost nearly a fifth of their value in the previous session.
GQG became one of the biggest investors in Adani Group companies after their stocks fell in March last year. On Thursday, it said that around 10% of its clients’ assets were invested in issuers related to the Adani Group.
The context: Morgans analysts said that over the medium- to long-term, they thought this would likely play out as an "investment mistake", while on a short-term basis negative sentiment and uncertainty around downstream risks may cap GQG's share price performance.
What they said: "Reputational risk is highly relevant for fund managers and whilst we ultimately think this issue should pass reasonably quickly, we would prefer to gain more confidence in that view," the analysts said.
The source: Morgans research
