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‘India, within Asia, should be one of the best markets for investments as they have a lot of drivers for growth which other markets do not have,’ says BofA Securities’ official.
David Hauner, head of global emerging markets fixed income strategy at BofA Securities, favours India’s five-year government bonds, anticipating a 25-50 basis point fall in bond yields across the curve.
India is poised to be one of the top three Asian markets to attract foreign capital once tariff concerns ease, with the Indian rupee and local currency bonds expected to benefit most, according to BofA Securities.
“India, within Asia, should be one of the best markets for investments as they have a lot of drivers for growth which other markets do not have,” David Hauner, head of global emerging markets fixed income strategy at BofA Securities, told Reuters.
He noted that, apart from India, Taiwan and South Korea could also see heightened investor interest in the region.
The Indian rupee, trading at 85.59 per dollar on Tuesday and remaining largely flat for the year after a 2.9% decline in 2024, is projected to appreciate to 84 against the US dollar by the end of 2025, Hauner said.
While the rupee could strengthen beyond 84 next year due to a weaker dollar, it is likely to remain near that level as the Reserve Bank of India may continue accumulating foreign exchange reserves, he added.
Hauner also said a softening dollar and the likelihood of rate cuts across emerging markets could attract more global investors. “I would expect that we will receive more inflows from the second half of the year, and we would see more proof that inflation globally is coming down and people will get more comfortable with EM fixed income, leading to more inflows,” he told Reuters.
The dollar has weakened, and US bond yields have climbed this year amid concerns that Donald Trump’s policy outlook may boost inflation and spark a sell-off in US Treasuries.
Despite the optimistic view, foreign investors pulled out over Rs 32,000 crore ($3.74 billion) from Indian government bonds in April and May, driven by fears over trade tensions. However, Hauner believes this trend could reverse as significant capital remains parked in US money market funds and may flow into emerging markets later in 2025.
BofA Securities expects the Reserve Bank of India to cut the repo rate by another 50 basis points this year, following 50 bps of reductions already delivered in 2025.
Hauner favours India’s five-year government bonds, anticipating a 25-50 basis point fall in bond yields across the curve. On Tuesday, the five-year bond yield stood at 5.85%.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
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