JP Morgan’s Index Open Doors For Massive Investments

The world’s largest bank in terms of market cap, JP Morgan Chase & Co., has announced that they will be including Indian government bonds in their indexes from 28 June 2024. According to various experts, India is expected to raise billions of dollars after the development. Moreover, this listing will give a broad range of investors access to the $1.3 trillion market. This will make India the 25th market to enter JP Morgan’s index since its inception in June 2005. 

JP Morgan announced the inclusion of Indian bonds in September, and since then, the bank has already received more than $11 billion in Indian bonds. Moreover, the bank expects an additional investment of around $25-$25 billion in the next ten years, increasing the foreign investment in Indian bonds from 2.5% to 4.4%. However, it can further increase India’s external debt. RBI recently announced that the external debt of India has increased in the last few months and the government will have to keep a close eye on India’s external debt. 

The JP Morgan Emerging Markets Bonds index is one of the most renowned markets for Emerging Market (EM) bonds. In 1990, when it was in its initial stages, it started by trading the first Brady bond, and since then, it has expanded to various government EM bonds and has also traded corporate EM bonds. 

Jalpan Shah, head of fixed income at Trust Mutual Funds, shared his views on the matter and said, “The inclusion of Indian Government bonds in JP Morgan emerging market bond index is a very positive development for the India Government bond market. The emergence of India as the fastest growing major economy, a stable government, low and stable inflation, low currency volatility and fiscal discipline makes a compelling argument for Foreign Institutional Investors (FII’s) to invest in Indian government bonds.

These bonds, issued under the RBI’s ‘Fully Accessible Route,’ are the only ones allowed to be listed in bond indices. They have a minimum outstanding amount of $1 billion and a minimum maturity time of 2.5 years. This development will attract foreign investment in the country, which completely aligns with the aspiration of a developing country like India.

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