HSBC Holdings Plc is actively collaborating with more than 200 international investment funds to facilitate their establishment in India, in anticipation of the country's inclusion in major global debt indices.
The financial institution is playing a pivotal role as a custodian, assisting these global investors with the necessary registration and procedural requirements. This initiative comes as India's sovereign debt is poised to be incorporated into JPMorgan Chase & Co.'s emerging-market index starting June.
Anita Mishra, HSBC India's head of markets and securities services, shared insights on the bank's efforts, including conducting roadshows in major financial hubs like London, Hong Kong, and the United States, aimed at promoting investment opportunities in India.
With India expected to achieve a 10% weighting in the index, it becomes imperative for funds that follow this gauge to incorporate Indian debt into their portfolios. This move is anticipated to generate significant business for banks and asset managers, preparing them for potential inflows of up to $40 billion.
HSBC is focusing on aiding investors with the onboarding process, which Mishra identifies as a primary concern. Since JPMorgan's announcement in September, foreign investments nearing $10 billion have flowed into index-eligible Indian bonds, making them the top-performing securities in local currency for emerging Asia debt in 2024.
Despite the positive momentum, investors have faced challenges in gaining onshore access in India, including extensive documentation, trading margin requirements, and restrictions on capital repatriation. However, FTSE Russell has recognized improvements in market accessibility, delaying India's inclusion in its emerging market index but acknowledging advancements like the introduction of a unified application form for foreign investors and the acceptance of digital signatures.
Furthermore, Bloomberg Index Services Ltd. has announced its plan to include India in its emerging markets index from January, marking a significant step forward in the country's integration into global financial markets. Bloomberg LP, the parent company of Bloomberg Index Services, administers competitive indices in the financial sector.
