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Global investors bet on Indian bonds as JPMorgan index inclusion nears
For decades, the titans of global finance viewed India as just another emerging market – a place with the potential for substantial gains but risky enough to be kept on the periphery of a portfolio. Then, as economic reforms were intensified around the turn of the century, they emerged with greater enthusiasm and today the country’s stock exchange is the fifth largest in the world by market value. Now, a similar focus is shining on India’s $1.3 trillion in sovereign debt, as fixed-income investors seek An alternative for Russia and China. “There is a strong case for India, in the medium to long term, to have a bigger place in people’s portfolios,” says Jae Lee, managing director at US asset manager TCW Group Inc.
On June 28, JPMorgan Chase & Co. plans to add Indian government debt to its largest emerging market bond index. This could boost global growth Indian debt investment by as much as $40 billion, Goldman Sachs predicts, as financial firms adjust your portfolios to reflect the recommended mix. In January, Bloomberg Index Services Ltd., a sister company of Bloomberg News, will begin including Indian bonds in its offerings. And Britain’s FTSE Russell is also considering adding India to its fixed income indices. “There are still teething questions,” Gloria Kim, global head of index research at JPMorgan, said in May. But “market feedback so far has been largely positive, with the majority of our index clients already prepared to trade.”