FOREIGNERS SET FOR BIGGER PLAY IN $1 TRILLION INDIA BOND MARKET
India’s $1 trillion government bond market has struggled for years to rise above the criticism of being insular. That is set to change after JPMorgan Chase & Co Thursday became the first global index provider to include them on its emerging markets index. The decision sets the stage for billions of dollars of inflows just when the bond market is straining under record government borrowings.
“This could be a push-factor to prompt foreign inflows into India and foreign investors are likely to be more active in the Indian fixed-income market,” Morgan Stanley strategists led by Min Dai wrote in a note, calling the index inclusion a “milestone event.” The move buttresses India’s aspirations for a bigger global heft as it boasts one of the world’s fastest rates of economic growth and positions itself as an alternative to China. At the same time, the inclusion will open up the nation’s public finances to greater scrutiny from foreign investors, likely increasing the volatility of local markets.
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