JP Morgan will add Saudi Arabia and the Philippines to its GBI-EM local-currency emerging market debt index starting January 29, 2027. The phased inclusion will occur over a 10-month period, integrating $79 billion in Saudi sovereign sukuk and $50 billion in Philippine government bonds into the widely tracked investment index.
MarketScreener reported that the inclusion follows a plan first outlined in April. The transition will adjust the composition of the bank’s index series, shifting the weightings of existing emerging market participants to accommodate the new entries. Once the phase-in concludes, Saudi Arabia is set to hold a 2.71% weight in the index, while the Philippines will hold 1.64%.
The adjustment includes a reduction in the “Country Cap”—the maximum allowable weight for any single nation within the “diversified” index—which will drop from 10% to 9%. This policy change forces a rebalancing among current heavyweights in the index. Major markets, including China, India, Mexico, Malaysia, and Indonesia, will see their individual weights reduced to meet this new 9% ceiling.
| Market | Status/Action | Weight Adjustment |
|---|---|---|
| Saudi Arabia | New Inclusion | 2.71% (Phase-in) |
| Philippines | New Inclusion | 1.64% (Phase-in) |
| China, India, Mexico, Malaysia, Indonesia | Existing Members | Capped at 9% |
For the Philippines, the inclusion brings peso-denominated government bonds into the GBI-EM index, which is tracked by institutional investors.
The reduction of the Country Cap to 9% reflects JP Morgan’s strategy to mitigate concentration risk within the index. By limiting the influence of larger economies like China and India, the index aims to provide a more balanced representation of emerging market debt. Investors tracking these indices will be required to adjust their portfolios over the 10-month window to match the new allocation targets as the index provider gradually increases the exposure to the two new entrants.
The implementation phase begins on January 29, 2027, setting a clear timeline for fund managers to align their holdings with the revised index structure.
