FTSE defers India’s bond index inclusion
FTSE Russell said Portugal would be added to a key government bond index and held off on a decision on South Korea and India for at least six more months.
The index provider will add Portugal to the FTSE World Government Bond Index effective November, noting upgrades to its credit rating in recent months, and remove Switzerland from the upgrade watch list.
South Korea, meanwhile, continues to stay on the watch list for inclusion to the FTSE global bond index—and India for the emerging-market equivalent—once more delaying the countries’ addition to the key gauges.
FTSE Russell “will continue to monitor the positive developments in the South Korean government bond market towards the successful fulfilment” of the criteria, FTSE said in the statement on Wednesday after markets closed in New York. It also acknowledged progress in “the accessibility of the Indian government bond market,” but said the market still doesn’t satisfy certain criteria. South Korea has been keen to get the index upgrade since FTSE added the country to its watch list for potential inclusion in September 2022. The move is expected to draw as much as 90 trillion won ($66.7 billion), according to the Korean government, citing estimates from investment banks.
Korean authorities have been intensifying efforts to improve the country’s market systems to court more foreign investors, most recently letting some global investors participate in the local interbank currency market. The government is also testing out extended trading hours of the local won market, ahead of its official extension due in July.
Meanwhile, India still doesn’t meet criteria including increased regulatory reporting and the tax clearance process, FTSE said. Both countries were not included on the indexes when they were last reviewed in September, 2023.
The provider said Switzerland was removed from an upgrade watch list after a tax reform stalled.
FTSE Russell’s decision highlights the hurdles some investors continue to face in accessing India’s bond market, even as the nation’s debt is set to get added to JPMorgan’s flagship emerging markets gauge starting in June.