Bloomberg Survey Shows 92% of Global Investors will Increase Participation in India if Access was Easier

Bloomberg launched a white paper ‘Accessing India’s Financial Markets’ highlighting findings from a  survey of top international asset and fund managers globally on what needs to be done to improve India’s relative attractiveness for foreign investment in its debt markets. 65 investors from Singapore, Tokyo, Melbourne, Hong Kong, London, New York, Dubai and India participated in a survey conducted from July – September 2019.

While there is considerable optimism that improving ease of access to India’s financial markets will generate new investment opportunities, there are significant barriers that need to be addressed for India to achieve its ambitions. Key findings of the survey include:

- Pent up demand: 92% of respondents say that they would increase participation in Indian financial markets if access was easier.

- A significant majority of investors (76% of respondents) admit that it is more difficult to access India’s financial markets compared to other markets they participated in.

- Main barriers: Capital controls (foreign investment caps) were cited by 38% respondents as the greatest barrier to accessing India’s financial markets. Low market liquidity (22%) and lack of electronic access (14%) were also identified as significant roadblocks to access.

- What investors want: A majority of respondents (37%) said clearer regulatory guidelines would increase ease of access and may lead to deeper foreign investor participation. Internationalization of bond markets were called out by 22% of respondents as a positive move to consider, while 13% also wanted new account processes.

- Corporate bond market: Respondents felt that greater depth and a more active yield curve are required in the Indian corporate bond market to drive global investor participation.

“Improving ease of access and unlocking the true potential of India’s markets will require a review of capital controls, greater clarity of regulatory requirements for participation and an investment in advanced trading technology,” said Nitin Jaiswal, Head of Government Affairs for Bloomberg in Asia Pacific. “Based on Bloomberg’s experience in global fixed income markets, there are four key main criteria in creating an investible bond market – regulatory guidelines, market access, investor demand and improved benchmarks. Having these factors in place will enable India to capitalize on a robust bond market that will ultimately unlock new financing opportunities, enhance capital allocation and drive economic growth.”

Survey Methodology:

Over a period of four months in 2019, a total of 65 buyside and sellside investors across Asia Pacific, the US, the UK and the Middle East provided responses regarding their views on ease of access to India’s financial markets. Of these participants, 19% participated in India’s bond market while 52% participated in India’s equity market. Questions mainly focused on how investors view India’s bond and equity markets and how easily they can access them. Clear trends were identified through tabulation and analysis of the responses. Some of the world’s largest asset managers participated in the survey, these included investors in Singapore, Tokyo, Melbourne, Hong Kong, London, New York, Dubai and India.

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