India top emerging market for investing in EM debt: Invesco Report

livemint.com:

emerging market (EM) for investing in EM debt. The country is increasingly viewed positively for its improved business and political stability, favourable demographics, regulatory initiatives, and a friendly environment for sovereign investors, according to a recent report by Invesco titled ‘’Invesco Global Sovereign Asset Management Study.'' A development sovereign based in the Middle East noted, “We don’t have enough exposure to India or China.

However, India is a better story now in terms of business and political stability. Demographics are growing fast, and they also have interesting companies, good regulation initiatives, and a very friendly environment for sovereign investors." India is among a number of countries, including Mexico and Brazil, that are benefitting from increased foreign corporate investment aimed at both domestic and international demand through “friend-shoring" and “near-shoring".

This was seen as helping fund current account deficits as well as support currencies and domestic assets including debt. Expectations for peaking inflation and a completion of the emerging markets tightening cycle was also playing a role in this trend.

Several EMs that saw an increase in their perceived fixed-income attractiveness, including Brazil, were widely expected to be overcoming inflation and to eventually stop tightening and start easing monetary policy. At the same time important commodity countries including Brazil and Indonesia were seen as well placed for the green transition and electric vehiclerevolution, and thus potentially an important source of diversification for sovereigns with more concentrated commodity revenue streams.