JPMorgan Ignites $40 Billion Rush Into Indian Bonds

For decades, the titans of global finance viewed India as just another emerging market—a place with the potential for substantial gains, but risky enough to be kept at the periphery of a portfolio. Then, as economic reforms picked up around the turn of the century, they jumped in more wholeheartedly, and today the country’s stock exchange is the world’s fifth-largest in market value. Now a similar spotlight is shining on India’s $1.3 trillion in sovereign debt as fixed-income investors seek an alternative to Russia and China. “There is a very strong case for India over the medium to longer term to have more of a place in people’s portfolios,” says Jae Lee, a managing director at US asset manager TCW Group Inc.

On June 28, JPMorgan Chase & Co. plans to add Indian government debt to its biggest emerging-market bond index. That could boost global investment in Indian debt by as much as $40 billion, Goldman Sachs predicts, as financial firms adjust their portfolios to reflect the recommended mix. In January, Bloomberg Index Services Ltd., a sister company of Bloomberg News, will start including India’s bonds in its offerings. And Britain’s FTSE Russell is considering adding India to its fixed-income indexes as well. “There are still teething issues,” Gloria Kim, global head of index research at JPMorgan, said in May. But “market feedback so far has been largely positive, with the majority of our index clients already set up to trade.”