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By Pooja Thakur
I was watching some coverage of this on CNBC today. It is really funny to listen to American talking heads lecturing Indian correspondents about fraud and investor confidence.
By Pooja Thakur
Jan. 8 (Bloomberg) -- The accounting scandal that caused Satyam Computer Services Ltd. to collapse yesterday is shaking investor confidence in Indian stocks, putting an end to the market’s best start since 2000.
“How did they manage to conceal a fraud of such magnitude even from the auditors?” said Greg Kuhnert, a London-based fund manager at Investec Asset Management Ltd., which manages about $10 billion and sold its 0.15 percent stake in Satyam last month. “That to me is a huge concern and is making me very nervous about the situation in India now.”
India’s Sensex index tumbled 7.3 percent yesterday, led by a 78 percent plunge in Satyam, after Chairman Ramalinga Raju said profits at the company had been inflated for years and then resigned. Satyam American depositary receipts fell $8.42, or 90 percent, to 93 cents before the opening of the New York Stock Exchange, which then halted trading in the stock.
Just six weeks after Franklin Templeton Investments’ Mark Mobius said the world’s second-fastest growing major economy would overcome the Mumbai terrorist attacks and prosper, his company said the Satyam scandal will weigh on investors.
“This unfortunate development will be a short-term negative for market sentiment,” Sukumar Rajah, chief investment officer of equity in India at Franklin Templeton Investments, which manages $4 billion of assets in the country, said in an e-mail.
Still, by forcing regulators to improve oversight, the incident “should be a long term positive,” Raju said.
‘Horrifying’
India’s markets regulator C.B. Bhave said the Satyam disclosure was of “horrifying magnitude.” The Securities & Exchange Board of India ordered a probe into trading in Satyam shares, according to the regulator’s Web site.
“We are verifying all the facts,” Prem Chand Gupta, India’s minister for company affairs, said in New Delhi yesterday. “Once we complete our investigation, we will take appropriate action,” he said, adding that “there will be no leniency.”
Satyam, which means “truth” in Sanskrit, shook the market after the Sensex had rebounded 7 percent in the first four days of the year and global investors turned net buyers of Indian shares. The index plunged 52 percent in 2008 and investors pulled a record $13.1 billion from the market last year, according to the nation’s stock market regulator.
“How did they manage to conceal a fraud of such magnitude even from the auditors?” said Greg Kuhnert, a London-based fund manager at Investec Asset Management Ltd., which manages about $10 billion and sold its 0.15 percent stake in Satyam last month. “That to me is a huge concern and is making me very nervous about the situation in India now.”
India’s Sensex index tumbled 7.3 percent yesterday, led by a 78 percent plunge in Satyam, after Chairman Ramalinga Raju said profits at the company had been inflated for years and then resigned. Satyam American depositary receipts fell $8.42, or 90 percent, to 93 cents before the opening of the New York Stock Exchange, which then halted trading in the stock.
Just six weeks after Franklin Templeton Investments’ Mark Mobius said the world’s second-fastest growing major economy would overcome the Mumbai terrorist attacks and prosper, his company said the Satyam scandal will weigh on investors.
“This unfortunate development will be a short-term negative for market sentiment,” Sukumar Rajah, chief investment officer of equity in India at Franklin Templeton Investments, which manages $4 billion of assets in the country, said in an e-mail.
Still, by forcing regulators to improve oversight, the incident “should be a long term positive,” Raju said.
‘Horrifying’
India’s markets regulator C.B. Bhave said the Satyam disclosure was of “horrifying magnitude.” The Securities & Exchange Board of India ordered a probe into trading in Satyam shares, according to the regulator’s Web site.
“We are verifying all the facts,” Prem Chand Gupta, India’s minister for company affairs, said in New Delhi yesterday. “Once we complete our investigation, we will take appropriate action,” he said, adding that “there will be no leniency.”
Satyam, which means “truth” in Sanskrit, shook the market after the Sensex had rebounded 7 percent in the first four days of the year and global investors turned net buyers of Indian shares. The index plunged 52 percent in 2008 and investors pulled a record $13.1 billion from the market last year, according to the nation’s stock market regulator.
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