JPMorgan Chase will cut the weight of the largest bond issuers in its flagship emerging-market (EM) index, diverting investor flows from the likes of China and India toward smaller nations.
The Wall Street bank will gradually lower the issuer cap on its GBI-EM Global Diversified index in the first half of 2026, according to a client notice.
The limit will fall to 9% from 10% currently, with the implementation to be phased over a period of several months, the documents dated Friday said.
The weighting reduction will affect the largest bond sellers in emerging markets, including Indonesia, Mexico and Malaysia, as well as China and India.
Thailand, Poland, South Africa and Brazil are among the biggest beneficiaries.
“Investors highlighted the benefits of lowering the diversification threshold to 9%, with a more balanced regional exposure that decreases the concentration risk and enhances the headline index yield,” JPMorgan said in the notice.
JPMorgan strategists have raised their forecasts for Emerging Markets (EM) sovereign debt issuance, and are now expecting a record year for the asset class.
JPMorgan strategists Fariha Ahmmed and Nishant Poojary forecast EM sovereign bond issuance this year could near $240 billion, which would set a record.
Lower-rated sovereigns that have regained market access may opportunistically look to tap debt investors, the strategists added.
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