First JP Morgan, Now Bloomberg To Add Indian Bonds On EM Index - A Signal Of Confidence In Economy

After JP Morgan added Indian government bonds to its EM index, Bloomberg is the next to include the country's bonds. This is an indication that there is a growing confidence in Indian economy and its macro financial stability.

Bloomberg announced nclusion of India Fully Accessible Route (FAR) bonds in the Bloomberg Emerging Market (EM) Local Currency Government Index and related indices, to be phased in over a ten-month period, starting January 31, 2025.

Indian FAR bonds will be included in the Bloomberg EM Local Currency Government indices with an initial weight of 10% of their full market value on January 31, 2025. The weight of FAR bonds will be increased in increments of 10% of their full market value every month over the ten-month period ending in October 2025, at which point they will be weighted at their full market value in the indices. The indices in scope for inclusion include the Bloomberg EM Local Currency Government Index, the Bloomberg EM Local Currency Government Index 10% Country Capped Index, and all related sub-indices.

Once completely phased into the Bloomberg Emerging Market 10% Country Capped Index, India is expected to join both China and South Korea as markets that reach the 10% cap. Within the market cap weighted version of the index, India is expected to be the third largest country after China and South Korea. Using data as of January 31, 2024, the index would include 34 Indian securities and represent 7.26% of a $6.18 trillion index on a market value weighted basis.

On the development, Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, "Bloomberg's decision to include Indian bonds in the Bloomberg Emerging Market Index, coming after the decision of JP Morgan to include India in the JP Morgan's Emerging Market Bond Index, is a vote of confidence in the Indian economy. Inclusion of India in the Bloomberg Bond Index is expected to attract investment exceeding $5 billion. This comes on top of the expected investment of around $20 billion in the JP Morgan EM Bond Fund. Including India in the EM Bond Fund is a declaration that India's financial market is mature and stable. This is also a vote of confidence in India's macro financial stability."

The decision to include India FAR Bonds in the Bloomberg EM Local Currency Government Index was taken following a period of extensive consultation to solicit feedback from market participants and stakeholders.