JP Morgan bond index India inclusion this week: Explained key changes, flows, impact on yields, what should investors do
Also Read: JPMorgan on track to include India in emerging market debt index from June; How will it impact Indian bonds and yields?The index weighting of India bonds is expected to reach a maximum weight of 10% in GBI-EM Global Diversified Index, 8.7% in the GBI-EM Global Index and 14.59% in the GBI-EM Global Diversified IG 15% Cap Index.Europe, Middle East and Africa (EMEA) area is estimated to see the largest regional hit to index weight. EMEA EM's aggregate weight is expected to drop to 26.2% by March when India's inclusion is complete compared to around 32% at the start of this month, Reuters reported.With India’s addition, Asia’s weight is estimated to increase to 47.6% in the index, HSBC Plc said in a note.
Also Read: India’s long-dated bonds are ‘clarion call’ for investorsIndian bonds inclusion in the JPMorgan index is estimated to draw $20 billion to $25 billion of global flows into local debt. However, India’s index-eligible bonds have already attracted $10 billion since the inclusion was announced in September last year.According to Morgan Stanley, investors tracking the index have already positioned for India’s inclusion, with 3.6% of their assets allocated to the nation’s sovereign debt at end-May, a Bloomberg report said.Speaking on the impact on huge foreign fund inflows, Reserve Bank of India (RBI) Governor Shaktikanta Das on June 7 had reiterated that there were no worries on expected heavy inflows from global bond inclusion.Also Read: Why the mutual fund industry is betting on duration funds“The RBI has a number of instrumentalities to manage the flows.
We have managed it in the past and we will manage it in future also. No worries on that," Das said during the last post-policy press
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