According to JPMorgan, its widely followed developing market debt index will now cover Indian government bonds. The fifth-largest economy in…
According to JPMorgan, its widely followed developing market debt index will now cover Indian government bonds. The fifth-largest economy in the world is projected to receive influxes of billions of dollars as a result of this inclusion.
The Government Bond Index-Emerging Markets (GBI-EM) index and the index suite, which are benchmarked by around $236 billion in worldwide funds, will cover India’s domestic bonds.
Starting on June 28, 2024, the index provider will add the securities. According to a statement, India’s weight on the index will not exceed 10%.
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23 Indian Government Bonds (IGBs) totaling $330 billion in notional value are eligible, according to JPMorgan. All are “fully accessible” to visitors who are not locals.
India is anticipated to have a weight of about 8.7% in the GBI-EM Global index and a maximum weight of 10% in the GBI-EM Global Diversified, according to JPMorgan.
As India is anticipated to attain the maximum weighting of 10%, inclusion will begin on June 28, 2024, and last for 10 months with 1% increments on its index weighting, according to JPMorgan.
Since the beginning of 2023, foreign investors have net bought $3.4 billion worth of Indian bonds. Less than 2% of the outstanding Indian government debt is owned by foreign investors.
“An inclusion in JP Morgan’s index could see others follow up,” BofA Securities stated in a report in July.
According to a study conducted by JPMorgan in March, support for India’s high-yielding, index-eligible government bonds had increased to 60% from 50% the year before.
Another significant index provider, FTSE Russell, is also keeping an eye out for Indian bonds to be added to its emerging market index.
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