Investors looking to escape the financial instability brought on by the US election are increasingly turning to India.
A steady stream of foreign investment has helped the country’s bonds rank among the best-performing emerging markets this year, while last month, the stock market hit a record high thanks to robust domestic liquidity. A number of structural elements contribute to India’s appeal, such as its currency being less impacted by large swings in the dollar than its emerging market counterparts, capital controls that restrict speculative capital flows, and stable political ties with both the US and Russia.
India’s detachment from international markets was brought to light last week when its sovereign bonds held steady in the face of a global selloff of US Treasuries. For ABRDN plc, the country has emerged as a major developing market investment, particularly as hedge funds brace for a spike in global volatility ahead of the US presidential election on November 5. Amid concerns in the financial markets, international funds are looking to India.
Leonard Kwan, portfolio manager of T. Rowe Price Group Inc.’s dynamic EM bond strategy, stated that “India local still screens fairly attractively to us” when compared to other assets worldwide, such as dollar-denominated debt. According to India, “we’re overweight rather than in line with the benchmark.”
