First day JPM flows not a deluge, but bankers confident of steady flow going ahead
JP Morgan bond index got off to a muted start with a lower-than-expected quantum of foreign flows on Friday, belying expectations of an immediate deluge. Bankers, including a top executive at the US bank, said however that overseas investment worth billions will steadily be pumped into the debt market of the world’s fastest-growing major economy.
Indian bonds debuted in JP Morgan’s GBI-EM global index suite on Friday, with the country expected to reach a maximum weight of 10% in the GBI-EM Global Diversified Index over a 10-month period. JP Morgan’s analysts expect foreign investment worth $20-25 billion to flow into the local bond market from the move.
“The index inclusion would bring in new investments from international investors both active and passive, boosting overall liquidity in the system,” Kaustubh Kulkarni, senior country officer, India, and vice chairman, Asia Pacific, JP Morgan, told ET on Friday.
“The pool of active investment capital from FPIs could also spill over to other domestic bonds over time once they become more familiar.”
From Thursday to Friday, aggregate holdings of foreign portfolio investors (FPIs) in the index-eligible Fully Accessible Route (FAR) suite of government bonds increased by Rs 1,545.16 crore to Rs 1.86 lakh crore, showed data released by the Clearing Corporation of India Ltd (CCIL) at 6 pm. The increase left traders somewhat underwhelmed as some market segments had bet on a surge of more than Rs 10,000 crore on Friday itself.
“If you look at the increase in the FAR
