Govt Papers See Big Surge in FPI Interest
sovereign debt nears inclusion in global bond indices, a diverse pool of international investors, ranging from long-term institutional funds in Japan, S Korea and Taiwan to exchange-traded funds in Europe, are setting their sights on the domestic bond market.
«We have witnessed an influx of clients coming to India over the last few months. Besides the major financial hubs, clients from other countries like Japan, Korea and Taiwan have also expressed significant interest,» said Anita Mishra, Head of Markets and Securities Services, HSBC India.
Indian bonds will be included on JP Morgan's GBI Emerging Markets bond index starting June, while Bloomberg has announced the incorporation of Indian bonds in its EM index from January 2025. Since JP Morgan's announcement last September, foreign investors have bought close to $9 billion of fully accessible government bonds.
«The interest is from FPIs set up across the globe. We have also seen about five fund houses launch ETFs in Europe focused on Indian government bonds. We are expecting a total flow of about $32-35 billion on the back of index inclusion,» said Vikas Jain, Head of India Trading, FICC, Bank of America.
DBS Bank India's head of global financial markets Ashhish Vaidya estimates inflows worth $3-4 billion in the near term from inclusion in the Bloomberg EM index and $25 billion over the 10-month period of inclusion in the JP Morgan EM index.
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