JPMorgan To Include Indian Bonds To Its Emerging Markets Index

JPMorgan Chase & Co. will be including Indian government bonds (IGBs) into its benchmark Emerging Market index, starting June 28, 2024.

“India is expected to reach the maximum weight of 10 percent in the Global Diversified index (GBI-EM GD),” according to the JPMorgan note.

The inclusion of the IGBs will be staggered over a 10-month period from June 28, 2024 to March 31, 2025, implying an inclusion of 1 percent weightage per month.

Currently, 23 Indian government bonds (IGBs) with a combined notional value of $330 billion are index eligible, the JPMorgan note said.

The GBI-EM GD accounts for nearly $213 billion of the estimated $236 billion benchmarked into the GBI-EM family of indices.

India was the last big emerging market that had not joined others like China on the global debt indices.

(India’s) index inclusion follows “the Indian government’s introduction of the FAR program in 2020 and substantive market reforms for aiding foreign portfolio investments,” the team led by the firm’s global head of index research, Gloria Kim, said in a statement. Almost three-quarters of benchmark investors surveyed were in favor of India’s inclusion in to the index, they said.

In March, JPMorgan had mentioned that the support for adding India’s index-eligible, high-yielding government bonds had risen to 60 percent from 50 percent in 2022.

Expectations that India may be added to international gauges had been rising in recent months as providers look to diversify index constituents. Russia’s invasion of Ukraine had seen it drop off indexes, while China’s worsening economic woes have taken the shine off the country’s sovereign debt.

Last month, Morgan Stanley had estimated that Indian bonds could be included into two out of the three global bond indexes, including a JPMorgan developing market gauge, driving inflows to the tune of nearly $40 billion. HSBC is expecting this move to bring inflows to the tune of $30 billion.

Last year, JPMorgan had said investors wanted issues resolved such as a lengthy registration process and operational readiness required for trading, settlement and custody of assets onshore.