JPMorgan To Add Indian Government Bonds To Its Emerging-Markets Index: Report

In a highly awaited event that can likely drive billions of foreign inflows to India's debt market, JPMorgan Chase & Co., a leading global financial services firm has decided to add Indian government bonds to its benchmark emerging-market index.

According to a Bloomberg report, the index provider will add the securities to the JPMorgan Government Bond Index-Emerging Markets starting June 28, 2024. The South Asian country will reportedly have a maximum weight of 10% on the index.

The move highlights India's growing appeal to global investors as the country's economic growth outperforms its peers. One recent example of India's growing geopolitical influence was when Apple Inc. picked India as a look for alternative to China. Recently, a report highlighted that Apple wants to move more than 18% of its iPhone production to India by 2025, up from 7% in 2023.

While foreigners play a less significant role in the Indian bond market, inflows have been rising in recent years and the country's assets have proven resilient to financial hardships faced by other developing nations. Clearing Corp. of India data shows that in anticipation of the inclusion, foreigners have increased their holdings of such bonds to almost $12 billion, compared to $7.4 billion at the end of 2022.

The inclusion may also prompt flows of as high as $30 billion, according to HSBC Holdings Plc.

In March, JPMorgan 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, according to the report.
It is worth mentioning that FTSE Russell also has the nation's bonds on index watch for inclusion in its emerging market gauge.

Speculations that India may be added to global gauges have been rising in recent months as major index providers intend to diversify index constituents. After Russia invaded Ukraine, the country was removed from indexes, while China's worsening economic conditions have also failed to lure the index providers.