Tensions and protests arising in the wake of introduction of CAA and the revoking of Article 370 in Kashmir has led US based Western Asset Management, which manages $453 billion assets, to reduce its Indian government bond holdings. The investor feels that this could possibly impact economic outlook.
The investor, an affiliate of Legg Mason Inc, is diverting some of its funds into longer-dated Malaysian and Chinese debt, according to Desmond Soon, head of investment management for Asia ex-Japan, according to reports. It has an "overweight" position in India bonds.
“It certainly distracts Prime Minister Modi’s government from making necessary economic policy and reforms to focus on the economy”, senior portfolio manager at Western Asset, Desmon Sood said. He further added, "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.
The investor’s view is that the protests over the controversial CAA may have temporarily taken the government's attention away from economic reforms.
The initial market euphoria from Prime Minister Narendra Modi's re-election last year is wearing thin as economic growth stutters and the policy making it harder for Muslim migrants to get citizenship is stirring countrywide protests.
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