FTSE Russell announced the addition of Portugal to a significant government bond index while postponing decisions regarding South Korea and India for at least six months.
Portugal will join the FTSE World Government Bond Index in November due to recent improvements in its credit rating. However, South Korea and India remain on the watch list for inclusion in the FTSE global bond and emerging-market indexes, respectively, with their addition delayed once again.
FTSE Russell stated it would continue monitoring developments in South Korea’s government bond market to ensure compliance with set criteria. Similarly, while acknowledging progress in India’s government bond market accessibility, certain criteria are yet to be met.
South Korea has actively sought this index upgrade, expecting significant investment inflows. Efforts to enhance market systems include allowing global investors to participate in the local interbank currency market and extending trading hours for the local won market.
India’s failure to meet criteria such as regulatory reporting and tax clearance processes has hindered its inclusion. Switzerland was removed from the upgrade watch list due to stalled tax reform.
The decision underscores challenges investors face in accessing India’s bond market, despite upcoming inclusion in JPMorgan’s emerging markets gauge. However, inflows to India’s bonds have made it one of the top performers in local currency emerging market debt.
FTSE Russell also decided to maintain Vietnam’s frontier market status due to ongoing issues with market access and trade settlement. Pakistan remains on the watch list for potential demotion amid declining index weight over the years.
