Bloomberg index inclusion to add $3-4 billion inflows

livemint.com:

MUMBAI : Financial news and data provider Bloomberg on Tuesday said it will add a set of Indian government bonds to its widely-tracked emerging market index, a development that could potentially attract investment flows of $3-4 billion beginning next year. Global investors with passive investment strategies buy stocks and bonds featuring in global indices, and Bloomberg's addition of Indian bonds promises to attract investments in them.

Indian bonds available under the fully accessible route (FAR) will be included in Bloomberg's Emerging Market (EM) Local Currency Government Index and related indices, beginning 31 January, 2025. Bloomberg's index rebalancing comes about six months after JP Morgan decided to include India's FAR securities in its GBI-EM Global index suite from 28 June 2024, a move expected to attract $22-25 billion over time.

"Indian regulators have thoughtfully implemented a number of enhancements and innovations in recent years - like the FAR programme, extended trading hours and more flexibility with margin requirements - that have bolstered bond market access and depth," said Nick Gendron, global head of fixed income index product, Bloomberg Index Services Ltd. “These changes, and the ongoing growth of India as a global investment destination, led us to conclude that index inclusion was an appropriate step to take today," said Gendron.

Introduced in 2020, FAR is a separate channel allowing non-residents to invest in specified Indian government securities without investment ceilings. As of 31 January, 34 Indian FAR bonds of $448 billion are eligible for the Bloomberg indices mentioned above.