JPMorgan says India index inclusion on track, most clients ready
JPMorgan Chase & Co. is on track to include India in its emerging market debt index from June with most of its clients ready to trade, according to the firm’s global head of index research.
“Based on the annual Index Governance Consultation process, market feedback so far has been largely positive, with the majority of our index clients already set up to trade in the IGB market,” managing director Gloria Kim said in an emailed reply to questions.
“As always, there are still teething issues when entering a new market, however we have found these to be related mostly to the operational readiness and flexibility of counterparties and custodians rather than barriers to entry,” she said, acknowledging the reforms made by government.
The difficulty in setting up to trade in India due to an elaborate documentation process has been one reason why foreign investors have been apprehensive about the nation’s entry into global indexes. Last September, JPMorgan said it would include India in its emerging market bond index, where it will have a maximum weight of 10%.
JPMorgan estimates foreign inflows will be between $20 billion and $25 billion, assuming an index-neutral position, Kim said. The firm estimates its emerging-market bond gauge currently has $216 billion of assets under management, she added.
“We have seen in the past that assets tracking the index are relatively sticky in nature and generally remain consistent,” Kim said.
Indian sovereign bonds have seen about $8 billion of inflows into the so-called Fully
