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Updated January 24th, 2024 at 11:27 IST

Government bonds can attract $100 billion in 3-5 years: HSBC Asset Management

The optimistic outlook follows JPMorgan's decision in September to include specific bonds in its Government Bond Index-Emerging Markets.

Reported by: Business Desk
Government bonds
Government bonds | Image:Republic
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HSBC Asset Management (India) has projected a potential influx of approximately $100 billion into government bonds within the next three to five years, primarily driven by index and strategic allocations.

The optimistic outlook follows JPMorgan's decision in September to include specific bonds in its Government Bond Index-Emerging Markets, resulting in around $6 billion inflows into these securities.

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Shriram Ramanathan, Chief Investment Officer for fixed income at HSBC Asset Management, expressed confidence in the attractiveness of Indian bond markets for large global institutional investors. Operational improvements and positive market aspects are expected to encourage strategic allocations, potentially raising foreign investor ownership to 8-9% of the total outstanding issuance.

Ramanathan forecasts an inflow of $25 billion in the upcoming financial year starting in April, with additional potential gains from inclusion in other global bond benchmarks like the Bloomberg Global Aggregate Index, estimated at $20-$25 billion.

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Currently, foreign holdings of bonds under the Fully Accessible Route (FAR) stand at approximately 3.8% of the outstanding issuance, based on clearing house data. The note from HSBC Asset Management highlights the evolving role of Indian bonds beyond emerging market index allocations, suggesting that foreign investors may increasingly view them as strategic assets rather than merely components of broader indices.

(With Reuters inputs)

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Published January 24th, 2024 at 11:27 IST

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