JPMorgan to add India to its emerging market debt index

JPMorgan to add India to its emerging market debt index

Global investment bank JPMorgan Chase and Co. on Thursday announced that it will be adding India to its emerging market debt index, with effect from June 28th, 2024.

While the much-anticipated decision is widely viewed as a significant positive for the Indian debt market, here's a detailed look at exactly what it means for investors.

The JPMorgan Government Bond Index-Emerging Markets index is officially called the JPMorgan emerging market debt index. JPMorgan's official website said that it has encouraged investors towards higher-yielding local rates by launching the GBI-EM series, which has become the new standard for local market benchmarks.

The index included government debt securities from countries like China, Malaysia, Philippines, Czech Republic, Hungary, Poland, Romania, Serbia, Turkey, Brazil, Colombia, Dominican Republic, Mexico, Peru, Uruguay and South Africa as of August 1, 2023.

What did JPMorgan say on Thursday?

On Thursday, JPMorgan said it will add Indian securities to the JPMorgan GBI-EM index starting June 28th, 2024. 23 bonds worth $330 billion are currently eligible to be added to the index.

On the index, India will have a maximum weight of 10 per cent, down from the previous high of 10 per cent. Inclusion will be staggered over 10 months at around 1 per cent weight per month.

The move is seen as a significant positive for India's debt market, as it would likely attract billions of foreign inflows.

In a recent note, HSBC Holdings plc said that giving global investors greater access may prompt flows of up to 30 billion in the Indian debt market. In addition, foreign investors have purchased $3.5 billion worth of Indian government debt this year, according to data compiled by Bloomberg.

This also imply more accountable fiscal policy-making ahead, the government said in a statement.

Emkay was expecting bond yields and the Indian rupee to reverse gains following the initial euphoria, tracking global markets. The trend is likely to reverse again in favour of bonds by end-March 2024, with the 10-year yield coming off well below 7 percent.