India is not keen to add its bonds to global indexes due to their concerns over ensuing market volatility, even as the gauge providers look at including the debt, according to TD Securities. “The message that we received was loud and clear; officials and even domestic funds were content with the status quo,” Mitul Kotecha, head of emerging markets strategy at TD, wrote in a note, citing his meetings, including those with officials of the finance ministry and market participants. “However, this doesn’t rule out inclusion as index providers appear keen to include India, and we still may see some progress this year.”
The note is in line with comments from Ajay Seth, Department of Economic Affairs Secretary at the nation’s finance ministry, who recently said it isn’t the “right time” to look at inclusion given the global situation. The rupee was the worst-performing currency among emerging Asian peers last year, weighed by a stronger dollar and outflows from local assets.
“This explains the reluctance to make changes to tax policies,” Kotecha wrote, adding that it was highlighted to them that the country wanted to avoid volatility in its sovereign bond market.
There’s a global tide in favor of Asia’s emerging market assets, with Goldman Sachs Group Inc to HSBC Holdings Plc bullish on the region. Expectations are also rising for South Korea’s inclusion in global gauges, with the country’s finance officials meeting representatives from FTSE Russell.