The owner of stock measures including the Dow Jones Industrial Average wants to strengthen ties with Asian and Latin American exchanges, with a goal of creating new indexes to be benchmarks for financial products.
S&P Dow Jones Indices is seeking to partner with bourses in those regions, Chief Executive Officer Alex Matturri said in an interview in Hong Kong yesterday. While there are no plans to open new offices in the regions, the unit of McGraw Hill Financial Inc. will hire more staff based on client demand, he said. The company this week announced a deal with Korea Exchange Inc. to collaborate on marketing and sales of KRX indexes.
“By having an exchange as a partner we’re designing indices to draw the capital flows back into the local market, which we think is very important,” Matturri said. “Otherwise nowadays you run the risk that index-type products could trade offshore and that sucks some of the liquidity out of the local market.”
The focus on Asia and Latin America is a result of stronger economic growth relative to the U.S. and European markets along with the increasing size of the investing public, he said. Economists forecast 6.3 percent growth in gross domestic product in Asia last year and 2.9 percent increase in Latin America, according to data compiled by Bloomberg. That compares with 1.4 percent for Europe and 2.8 percent in the U.S.
While several countries in the two regions have established derivatives markets, Matturri said that the use of exchange-traded funds and index-based strategies is still nascent.
S&P Dow Jones Indices, a joint venture of McGraw Hill Financial and CME Group Inc., competes with index providers such as MSCI Inc., Stoxx Ltd. and London Stock Exchange Group Plc’s FTSE Group. Their indexes not only give investors a sense of how equity markets around the world are performing, but also serve as the basis for tradable products such as ETFs.
The McGraw Hill division already has a foothold in Asia with the S&P/ASX 50 and S&P/ASX 200, which are benchmark indexes for Australian stocks.