JP Morgan "Russia Expelled from All Bond Indices... Effective from the 31st" (Comprehensive)

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] JP Morgan has decided to exclude Russia, which is attacking Ukraine, from all bond indices.

According to Bloomberg and other sources on the 7th (local time), JP Morgan announced in a statement that from the 31st of this month, Russian bonds will be excluded from all JP Morgan bond indices, including the Emerging Markets Bond Index (EMBI), Global Emerging Markets Government Bond Index (GBI-EM), and Emerging Markets Corporate Bond Index (CEMBI). Russia and Belarus will also be excluded from ESG (Environmental, Social, and Governance) indices.

However, major foreign media analyzed that since Russia's weighting in JP Morgan's EMBI is only 0.83%, its exclusion from the indices this time will not significantly affect the value of the indices.

JP Morgan's move is interpreted as a response to Russia's airstrikes on Ukraine. After Russia faced successive Western sanctions due to its invasion of Ukraine, JP Morgan placed Russia on its watchlist on the 1st. The day before, JP Morgan warned in a report that Russia is highly likely to default on dollar bonds maturing on the 16th, indicating a high possibility of a default declaration.

Earlier, financial index providers Morgan Stanley Capital International (MSCI) and Financial Times Stock Exchange (FTSE) Russell also announced the removal of the Russian stock market from their indices. If Russia is excluded from such bond indices, there is a possibility that funds will exit and flow into other countries.

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