JPMorgan to include India in its emerging market debt index, paving the way for billions in inflows
emerging market debt index. This inclusion is likely to prompt billions of dollars of inflows into the world's fifth-largest economy. India's local bonds will be included in the Government Bond Index-Emerging Markets (GBI-EM) index and the index suite, benchmarked by about $236 billion in global funds according to JPMorgan.
The index provider will add the securities starting June 28, 2024. India will have a maximum weight of 10% on the index, according to a statement. JPMorgan said 23 Indian Government Bonds (IGBs) with a combined notional value of $330 billion are eligible.
All fall under the category of "fully accessible" for non-residents. “India's weight is expected to reach the maximum weight threshold of 10% in the GBI-EM Global Diversified, and approximately 8.7% in the GBI-EM Global index," JPMorgan said. Inclusion will start on June 28, 2024, and extend over 10 months with 1% increments on its index weighting, as India is expected to reach the maximum weighting of 10%, JPMorgan added.
Foreign investor have net purchased Indian bonds to the tune of $3.4 billion so far in 2023. Foreign investors own less than 2% of outstanding Indian government debt. "An inclusion in JP Morgan’s index could see others follow up," BofA Securities said in a report in July.
In March, JPMorgan had said that support for adding India’s index-eligible, high-yielding government bonds had risen to 60% in its survey, up from 50% in the previous year. Meanwhile, another major index provider, FTSE Russell also has Indian bonds on index watch for inclusion in its emerging market gauge. JPMorgan also said Egypt's eligibility in the GBI-EM series will be on review for three to six months, due to reports of "material" hurdles in currency
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