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

LONDON, Oct 12 (Reuters) - India's government bonds are likely to gain inclusion in global indexes in 2022, bringing potential inflows of between $30 billion and $40 billion, HSBC analysts estimate.

HSBC said an announcement about India's inclusion in the Bloomberg Global Aggregate Index (BGAI) and JPMorgan's GBI-EM Index (GBI-EM) could happen before the end of 2021, with inclusion to follow in 2022.

The bonds could suck in potential flows of $30 billion to $40 billion in the event Fully Accessible Route (FAR) government securities were included in both indexes, HSBC said.

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

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

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

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Gold stocks weaker but outperform slump in other sectors

West Africa-focussed Robex and PDI to merge

Gold stocks outperform equity market gains

Most major producers rise but TSXV gold mixed

Platinum, palladium, copper gain on green China, supply constraints