Indian Bonds
Mirae Asset Management Co.’s fund dedicated to Indian debt has grown to about 32 billion won ($22.5 million) from 24 billion won at the end of last year, thanks to the first net inflow in about three years, according to Kim Jin Ha, head of the global fixed income division at South Korean money manager.
The mania for India’s burgeoning bond market has stretched as far as South Korea, where a bond fund that’s been basically dormant for a decade is now attracting plenty of interest.
Mirae Asset Management Co.’s fund dedicated to Indian debt has grown to about 32 billion won ($22.5 million) from 24 billion won at the end of last year, thanks to the first net inflow in about three years, according to Kim Jin Ha, head of the global fixed income division at South Korean money manager.
“The public is growing more interested in India, unlike the past when only a few institutional investors showed interest,” he said in an interview. Kim said he’s seen eight securities companies and banks dealing with local retails investor this year with questions regarding India’s bond market, compared with nearly none in 2023.
India and US markets have been in the focus, with the rise to records playing out in the backdrop of a still-nascent rebound in Chinese shares. Even Japan’s retail investors, who have historically been oriented toward the US, are expressing interest in the South Asian nation that has the greatest growth rate among the big nations.
“The hottest topic is certainly the US these days, but outside of US assets, India is gaining attention as an alternative to China,” said Cho Jae Sung, general manager of Shinhan Bank’s Seoyeouido branch in Seoul. The interest is mostly from those who like funds and are seeking for greater returns, Cho added.
The decision comes as China grapples with continued economic issues, while India’s government bonds are poised to be included to JPMorgan Chase & Co.’s global debt indexes from June.
The inclusion is projected to entice up to $30 billion in inflows, which exceeds the size of Indian government bonds already owned by foreigners, Kim said, adding that the appeal of investing in India is also attributable to its stable rupee.
The rupee is Asia’s top performer this year, up 0.4% vs the dollar with the lowest volatility among developing market currencies, according to statistics collated by Bloomberg. The South Korean won has dropped 3.2% in the same time, after rising 4.8% in the fourth quarter.
Kim, who has been managing the India fund since 2013, said he favors investing in rupee bonds issued by supranational entities. The securities constitute about 40% of the fund, with the balance allocated to debt issued by the nation’s state firms, the country’s treasuries and currency, he added.
He aims to extend the fund’s current duration of 2.7% given the probability of the Federal Reserve decreasing rates later this year.
The fund has returned 9.3% during the previous 12 months as of Monday, and roughly 6% annually over the preceding five years, figures provided by Bloomberg indicate.
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