JPMorgan says India index inclusion on track, most clients ready: Bloomberg report

“Based on the annual Index Governance Consultation process, market feedback so far has been largely positive, with the majority of our index clients already set up to trade in the IGB market,” the report quoted JPMorgan Managing Director Gloria Kim.

Acknowledging the reforms made by the government, Kim said, "As always, there are still teething issues when entering a new market, however we have found these to be related mostly to the operational readiness and flexibility of counterparties and custodians rather than barriers to entry."

The difficulty in setting up trade in India due to an elaborate documentation process has been one reason why foreign investors have been apprehensive about the nation’s entry into global indexes, according to the Bloomberg report.

JPMorgan, last September, said it would include India in its emerging market bond index, where it will have a maximum weight of 10 percent, the report said.

The American financial institution estimates foreign inflows will be between $20 billion and $25 billion, assuming an index-neutral position, Gloria Kim said.

Kim added that JPMorgan estimated its emerging-market bond gauge currently has $216 billion of assets under management.

“We have seen in the past that assets tracking the index are relatively sticky in nature and generally remain consistent,” Gloria Kim was quoted by Bloomberg as saying.

According to the Bloomberg report, the process of inclusion is set to commence on June 28, 2024, and will span over 10 months.

JPMorgan stated that during this period, there will be incremental increases of 1 percent in India's index weighting, ultimately reaching the maximum allocation of 10 percent, the report added.