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Jefferies Dumps HDFC Bank, Cuts India Weight; Shares Slip 3%

Global brokerage Jefferies has removed HDFC Bank from its major long-only equity portfolios, replacing it with HSBC. This follows the resignation of the bank's part-time chairman, Atanu Chakraborty, who cited a misalignment with his personal values and ethics. The move has led to a reduction in India's overall weightage in Jefferies' Asia Pacific portfolio. HDFC Bank's shares fell 3% amid the news, with analysts flagging potential governance concerns.

Key Points: Jefferies Exits HDFC Bank, Reduces India Exposure

  • Jefferies exits HDFC Bank holdings
  • Adds HSBC to key portfolios
  • Reduces India weight in Asia Pacific portfolio
  • Chairman resigned citing values clash
2 min read

Jefferies rejigs key portfolios, removes HDFC Bank; bank shares slip 3 pc

Global brokerage Jefferies removes HDFC Bank from key portfolios after chairman's resignation, sparking a 3% stock drop and governance concerns.

"not in congruence with his personal values - Atanu Chakraborty"

New Delhi, March 27

Major global leading brokerage Jefferies has exited its holdings in HDFC Bank and reduced its India exposure across key portfolios, following the resignation of the lender's part-time chairman Atanu Chakraborty.

In its latest "Greed & Fear" report, Jefferies strategist Chris Woods said the firm has removed HDFC Bank from its Asia ex-Japan long-only equity portfolio, global long-only equity portfolio, and international long-only equity portfolio (ex-USA). No specific reason, however, was provided for the exit.

The brokerage has, instead, added HSBC with a 4 per cent weighting in these portfolios, replacing HDFC Bank. The move has also resulted in a marginal reduction in India's overall weightage.

Jefferies further indicated changes in its Asia Pacific ex-Japan relative-return portfolio, reducing exposure to India and Australia by two percentage points each, while increasing Taiwan's weight by four percentage points.

India's weight in Jefferies' Asia Pacific ex-Japan allocation currently stands at 13 per cent, slightly above the MSCI benchmark.

The developments come after HDFC Bank disclosed on March 18 that its part-time chairman Atanu Chakraborty had resigned, citing differences with the bank over "values and ethics". The lender subsequently appointed Keki Mistry as interim part-time chairman.

Earlier, the bank has ​appointed law firms to review the exit of ‌Chakraborty.

In his resignation letter, Chakraborty referred to certain practices within the bank that were "not in congruence" with his personal values, without elaborating further.

Analysts flagged potential sentiment concerns. Anuj Singla of JPMorgan said that while no specific misconduct has been alleged, the perception could weigh on investor sentiment and increase governance risk premium on the stock.

Reports also suggest that the Reserve Bank of India (RBI) may be examining the circumstances surrounding the resignation.

Shares of HDFC Bank declined as much as 3 per cent to Rs 758 on the BSE as of 12:30 am. The banking stock has declined about 14 per cent in the past one month.

- IANS

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Reader Comments

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Priya S
HDFC Bank has been a pillar of stability for so long. This news is really disappointing. As a long-term shareholder, I hope the board and the new interim chairman, Keki Mistry, address these governance concerns transparently and quickly. The 14% drop in a month is painful 😔.
R
Rohit P
Typical foreign institutional investor (FII) behavior. They exit at the first sign of trouble, causing panic and making the stock cheaper. Then they might buy back later. This could be a buying opportunity for those with a strong stomach, but only after the RBI review is out.
S
Sarah B
Working in finance in Mumbai, I see this as a calculated move by Jefferies. They're rebalancing based on regional outlooks. Reducing India and Australia, increasing Taiwan... it's a macro call. The HDFC exit is the trigger, but the portfolio shift is broader strategy.
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Vikram M
The lack of a specific reason from Jefferies is more worrying than the exit itself. It creates room for speculation. What "practices" was Chakraborty referring to? The bank needs to come clean, not just appoint law firms for a review. Transparency is key for trust.
K
Karthik V
One brokerage's decision shouldn't define the fate of a giant like HDFC Bank. Remember, it's still one of the largest and most systemically important banks in India. The fundamentals remain strong for the long term. This is a sentiment-driven correction. 🙏

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