look news india
NEW DELHI: Thailand, Poland and the Czech Republic are three emerging market competitors of India that could face a reduction in their respective weightings in the JPMorgan Image Markets Bond Index over the next 10 months, HSBC analysts said recently. Indian government securities will start being included in this index from June 28, 2024.
The adjustment in India's 10 percent weight in the index will result in a change in the weightings for other emerging market peers in the index, reducing their weightings. However, the impact of the change in India will not be significant, as India will be fully included in the index in a phased manner over a period of 10 months.
Meanwhile, Indian government bonds have seen inflows of $10.4 billion since the inclusion was announced on September 21, 2023. In comparison, the first eight months of 2023 saw only $2.4 billion inflows and annual foreign capital inflows of $1 billion in 2021 and 2022.
Looking at foreign investments in government bonds through September 2023, only $8.3 billion was invested in index-linked bonds, and four issues alone accounted for 66 per cent of the investments.
Foreign investment positions in most index-eligible government bonds are still below their potential weightings in emerging market indices.
The size of the government bond market is around Rs 112 lakh crore.
However, foreign investment without any investment restrictions is permitted only in specified liquid benchmark securities, which are classified as securities falling under the fully accessible route.