India’s ‘sweet spot’ lures bond funds amid global market turmoil
debt market for 14 weeks in a second streak of buying this year, evidence of the country’s appeal amid the ructions of worldwide financial markets.
With the prospect of interest rate cuts on the horizon and the rupee treading water near historic lows, offshore investors have bought roughly $7 billion net of the South Asian country’s bonds since May. That’s more than twice the sum of net purchases for Indonesia, to which it is often compared, according to data compiled by Bloomberg.
The flow of money into India, the world’s fastest-growing major economy, has been so strong that officials even moved to temper the enthusiasm — albeit to little avail. The country’s securities — which recently joined a key JPMorgan Chase & Co. gauge — are some of the best performing in Asia this year.
“India is in a sweet spot from a macro perspective and also from a monetary policy perspective,” said Jenny Zeng, chief investment officer for Asia Pacific fixed income at Allianz Global Investors Apac Ltd.
Zeng is investing in five-year notes, citing the country’s domestic-driven economy. “India isn’t as vulnerable to external shocks as, for example, Indonesia,” she said.
Inclusion in JPMorgan’s flagship emerging bond index was a watershed moment for the Indian market, which the government has long sought to shield from the whims of overseas funds by enacting complex regulation.
A large local investor base and a central bank that’s regularly intervening to stamp out swings in the currency only add to the country’s appeal. This has
