LONDON: Egypt's local sovereign bonds could attract inflows of up to $2.4 billion due to inclusion in a key global emerging market index which started earlier this week, JPMorgan said on Thursday.

Egypt's bonds were added with an initial weighting of 0.81% to JPMorgan's GBI EM indexes on Jan. 31 with the weighting expected to increase to 1.63% following the monthly rebalancing at the end of February, which will see a total of 12 bonds included in the benchmark, the bank said.

"We expect index related flows are likely to have been in the region of $0.6-$1.2 billion as part of the initial inclusion, with a similar amount expected next month," Sean Kelly at JPMorgan wrote in a note to clients.

Egypt, whose 10-year bonds yield just under 15% currently , is the second highest yielder in the index after Turkey, where the same bonds yield around 24%.

JPMorgan said in held an overweight stance on the bonds, with its economists predicting that the country's current account deficit to narrow to 3.3% of GDP in the financial year 2021/2022 and by 2.5% in the following one.

"The majority of the improvement stems from an expected improvement in tourism revenue as COVID-19 concerns begin to fade," Kelly wrote. "Suez canal receipts have remained strong, with the 6% increase in transit fees introduced this month set to bolster receipts."

The bank said it estimated that $250 billion of assets under management are benchmarked against its GBI-EM indexes.