India bond index inclusion to trigger up to $40 billion inflows, says HSBC

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LONDON, Oct 12 (Businesshala) – Analysts at HSBC expect India’s government bonds to be included in the global index in 2022, with potential inflows of between $30 billion and $40 billion.

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HSBC said India’s inclusion in the Businesshala Global Aggregate Index (BGAI) and JP Morgan’s GBI-EM Index (GBI-EM) may be announced before the end of 2021, which will be included in 2022.

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HSBC said the bonds could suck in a potential inflow of $30 billion to $40 billion if fully accessible route (FAR) government securities are included in both indexes.

The Reserve Bank of India had introduced FAR last year to attract foreign investors.

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Foreign ownership of FAR bonds will increase to 10%-13% from currently 3%, HSBC forecast.

“For EM (emerging market) investors, low foreign ownership of India’s bonds, strong external balance and relatively low correlation of Indian government bond yields with major bond markets may provide an attractive source of diversification,” analysts note in the note. Is.” (Reporting by Tom Arnold; Editing by Alison Williams)

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