India may be part of global bond indices in 2022: Morgan – Times of India
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NEW DELHI: Morgan Stanley expects India to be included in global bond indices (GBIs) in early 2022 and projects that the index inclusion will attract $170-250 billion in bond inflows in the next decade in its basebull scenario. “This would have profound implications for the economy, FX, bond yields and equity markets,” it said in a report on Wednesday.
It said that foreign ownership of Indian government bonds (IGBs) has been declining but 2022 would be the turning point that could bring an acceleration of bond inflows.
“The GBI-EM and Global Aggregate indices are likely to include India in early 2022. We expect oneoff index inflows of $40 billion in 2022-23, followed by annual inflows of $18.5 billion in the next decade, pushing foreign ownership up to 9% by 2031,” the report said.
It said that the opening up indicates policymakers’ desire to push growth rates higher through investment. It will push India’s balance of payments into a structural surplus zone, indirectly create an environment for a lower cost of capital and ultimately be positive for growth, the report said.
It said that foreign ownership of Indian government bonds (IGBs) has been declining but 2022 would be the turning point that could bring an acceleration of bond inflows.
“The GBI-EM and Global Aggregate indices are likely to include India in early 2022. We expect oneoff index inflows of $40 billion in 2022-23, followed by annual inflows of $18.5 billion in the next decade, pushing foreign ownership up to 9% by 2031,” the report said.
It said that the opening up indicates policymakers’ desire to push growth rates higher through investment. It will push India’s balance of payments into a structural surplus zone, indirectly create an environment for a lower cost of capital and ultimately be positive for growth, the report said.
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