JPMorgan Chase & Co. is set to add India to its emerging market debt index in June, as confirmed by the firm's global head of index research, with the majority of its clients ready to trade, as per a report by Bloomberg.
The financial institution had announced the incorporation of India into its emerging market bond index last year, with a capped weight of 10 per cent.
“Based on the annual Index Governance Consultation process, market feedback so far has been largely positive, with the majority of our index clients already set up to trade in the IGB market,” Gloria Kim, Managing director, JPMorgan reportedly said.
“As always, there are still teething issues when entering a new market, however we have found these to be related mostly to the operational readiness and flexibility of counterparties and custodians rather than barriers to entry,” she added.
According to the report, the documentation process required for trading in India has posed out to be a major challenge, in turn contributing to foreign investors' reluctance regarding the country's inclusion in global indexes.
The firm is estimating foreign inflows ranging between $20 billion to $25 billion, assuming an "index-neutral position". She mentioned that the firm's current assets under management in its emerging-market bond gauge stand at $216 billion.
Bloomberg Index Services Ltd. will also be incorporating India into its emerging markets index from next year, January 2025. Earlier in the year, the company had said that it would include India's Fully Accessible Route (FAR) bonds in the Bloomberg Emerging Market (EM) Local Currency Government Index and associated indices. This entire integration process is expected to span around 10 months.
