Indian government bonds will be added to the FTSE emerging markets (EM) bond index and other regional indices from 2025. Inclusion will be in a phased manner over a six-month period starting September 2025, joining the move by other international benchmarks, JPM GBI-EM, which is already underway and Bloomberg indices due to start in early 2025. While potential incremental flows might be modest given the relatively smaller AUM tracking this index vs other benchmark indices, yet addition to three leading global EM fixed income platforms will broaden access of IGBs to foreign investors. A recent factsheet of the EM index cites par amount i.e., total market value/capitalisation of bonds (total securities in the index prior to India’s addition) at $4.7trn (erroneously mentioned as AUM in yesterday's note), with Asia Pacific’s share at 78.5% last month. With India’s addition, the market value of the index stands to rise further, as the total count of (all) securities will jump from 426 to 458. Based on the October 2024 index profile and press release, 32 INR denominated FAR bonds are likely to be eligible for the EMGBI index. Weightage of the eligible INR bonds in the FTSE EM index will be 9.35% on a market value weighted basis. As it stands, positive real yields, relatively contained rupee vols, a supportive macro backdrop, strong defences against market volatility (record high reserves stock), and ongoing fiscal consolidation are key factors that make IGBs attractive for investors. Inclusion into the global fixed income benchmarks will necessitate maintained broader macro stability and better fiscal discipline. In the near-term, we don’t expect these inflows to stoke material swings in the rupee or liquidity, courtesy of the central bank’s active presence to minimise volatility. South Korea has also been added to the FTSE world index. The RBI MPC is due to announce its rate decision this afternoon – our policy preview was published here.
Topic
Explore more
E & S Macro StrategyGENERAL DISCLOSURE/ DISCLAIMER (For Macroeconomics, Currencies, Interest Rates)
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
[#for Distribution in Singapore] This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor protection regime does not apply. The prices of virtual currencies may fluctuate greatly, and the investment risk is high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own independent advice.