Western Asset Management, an affiliate of Legg Mason, is currently 'overweight' on Indian bonds
Western Asset Management Co has lowered its India bond holdings due to the contentious Citizenship Amendment Act (CAA) and tensions in Kashmir, Bloomberg reported.
The company is transferring some of its Indian government bond holdings to Chinese and Malyasian debt, Desmond Soon, Head of its Investment Management for Asia ex-Japan, told Bloomberg.
However, the bonds manager, an affiliate of Legg Mason, is currently 'overweight' on Indian bonds.
It feels that protests over the controversial CAA may have temporarily taken the government’s attention away from economic reforms. “It certainly distracts Prime Minister Narendra Modi’s government from making the necessary economic policy and reform to focus on the economy,” Soon told Bloomberg, adding: “We are in the process of reducing India somewhat.”
Foreign holdings in Indian sovereign bonds have slipped to their lowest in three years, the report said.
Global funds are exiting Indian bonds because over the weakening economic scenario, and because the Reserve Bank of India (RBI) might not cut interest rate for a few months, the article quotes Ek Pon Tay, Portfolio Manager for Emerging-Market Fixed-Income at BNP Paribas Asset Management as saying.“An expected increase in the fiscal deficit and economic growth not yet rebounding from below-trend levels mean bond yields will be under further upward pressure,” Tay added.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.