New Delhi, Nov 17
India has become a market that you can’t ignore, pushed on by government reforms and a booming tech industry, top industry experts have said.
Speaking at a recent seminar hosted by The Asset in association with Deutsche Bank on the Asia investment opportunity and the post-trade response, they said that five years ago, India’s weighting on the Emerging Market index was 9 per cent.
"It is now over 20 per cent. It is a growth story with a lot of structural positives – and a lot of positive stories around penetration in various product categories," said a participant.
As per the MSCI EM Index, the top 5 countries account for nearly 80 per cent of the weightage in the MSCI Emerging Market Index. India has gone from strength to strength in recent years. The inclusion in June 2024 of Indian government bonds into the J.P. Morgan Global Bond Index-Emerging Markets indices for the first time also sets the stage for billions of dollars more to flow into India, according to the panel experts.
Moreover, global brokerage CLSA has just shifted its "tactical allocation" to India from China, citing growing concerns over Beijing’s economy and investor sentiment after the US presidential election. "US yields and inflation expectations sap scope for the Fed and, thus, The People's Bank of China (PBOC) to ease. We are anxious that these concerns lead to a buyers' strike by offshore investors who built China exposure post the initial PBOC stimulus in September. We therefore reverse our tactical allocation in early October, returning to a benchmark on China and a 20 per cent overweight on India," CLSA said in its note.
“We now reverse that trade. Both MSCI China and India have corrected by 10 per cent in US dollar terms over the duration so we did not lose on making the switch," it added.
India’s inclusion in the prestigious FTSE Russell’s Emerging Market government bond index in September next year has also been lauded by the industry.
FTSE Russell announced that it will add India's sovereign bonds to its Emerging Markets Government Bond Index (EMGBI) in September 2025. India's debt will be included in FTSE's 4.7 trillion dollar Emerging Markets bond index, with the inclusion happening over a six-month period. It will carry a final weightage of 9.35 per cent, which is second only to China in the index. The country has also become the sixth-largest market in the MSCI All Country World Investable Market Index (ACWI IMI), surpassing China. The global index tracks capital market performance across the world.