JPMorgan Reduces China and India Holdings in Key EM Bond Index

JPMorgan Chase & Co. is set to reduce the influence of major bond issuers within its key emerging-market index. This move is aimed at redirecting investor funds away from countries like China and India, focusing instead on smaller nations.

According to a client notice reviewed by Bloomberg, the Wall Street institution will gradually decrease the issuer cap on its GBI-EM Global Diversified index during the first half of 2026. The cap will change from the current 10% to 9%, with the adjustments expected to roll out over several months.

A spokesperson from JPMorgan did not provide immediate comments on the matter.

The bank’s index serves as the primary benchmark for funds investing in developing nations’ debt, meaning that modifications to its structure will significantly influence global investment patterns. Earlier this year, JPMorgan’s index team sought feedback from clients regarding these changes.

This adjustment will particularly impact the largest bond issuers in emerging markets, including countries like Indonesia, Mexico, and Malaysia, in addition to China and India. Conversely, nations such as Thailand, Poland, South Africa, and Brazil are anticipated to gain from this shift.

In the notice, JPMorgan mentioned, “Investors have recognized the advantages of lowering the diversification threshold to 9%, which creates a more balanced regional exposure and reduces concentration risks while enhancing the overall yield of the index.”

China’s bonds were incorporated into JPMorgan’s indexes back in 2020, followed by the addition of Indian bonds last year.

Furthermore, on Friday, JPMorgan announced that Saudi Arabia and the Philippines have been placed on watch for potential inclusion in the benchmark for local debt, thanks to recent market reforms in both countries. If these nations are included, their estimated weightings would be approximately 2% and 1%, respectively.

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