India is the third-most attractive bond market in the emerging market (EM) universe, according to a study conducted by Edelweiss.
The brokerage has calculated “real yields” for all EMs after adjusting for currency volatility. Indonesia is the most attractive region among EMs, followed by Singapore.
The 10-year government bond yield is Indonesia is around 7.96 per cent, slightly higher than India’s where 10-year bond yields have cooled off below 7 per cent. The yields in Singapore are among the lowest in EMs, however, the nation offers relative stability, say experts.
Turkey offers a yield of nearly 19 per cent but has a highly volatile currency and economy. The year-to-date foreign institutional investor (FII) inflows into the domestic debt market are low compared to most other EMs. Edelweiss says there is a case for flows to accelerate.
“Expected reigning in of the fiscal deficit and easier monetary policy should attract sustained FII flows going ahead. They would be aided by the increasingly dovish stance of major central banks like the US Federal Reserve, the European Central Bank, the Bank of Japan and the People's Bank of China,” says the brokerage.