S&P DJI CEO on Business Strategy, Markets Outlook

Let's talk a little bit about the first part of that sentence, which is the importance of the US and global equities in Japanese portfolios. Tell us a little bit about how what sort of trends you're seeing this year. We know that this is an annual conference. You're 16th so far. It is. It's fantastic to be back in Tokyo. And as you said, this is our 16th year and this is our biggest in terms of attendees and people who've signed up. So I think the interest level, both investing in Japan but also Japanese investors, as you said, to look elsewhere for international investments. We've noticed for example, in our S&P World Index over the last decade, the weighting of US equities has grown from less than 50% of a world index to now 60%. So the concentration that we've heard about, but also the demand for US equities has grown pretty substantially. And we're seeing that that demand here in Japan. Of course, a lot of that is to do with the tech behemoths, right? And that concentration. So I guess it's really important more than ever for diversification in this story. So how does Japan play into that? Well, Japan, through the market reforms started, you know, 7-8 years ago, which have moved forward now with changes in monetary policy. You've seen wage growth, you know, more recently. So there's an optimism over the medium term for investing in Japan. And we've seen flows come here. And then domestically, you've seen significant form reform for savers, the Nisa plan, the Nippon Investment savings accounts have grown and expanded. So I think both for domestic investors, but also for international, Japan is really top of many investors lists right now. We hear a lot of optimism when it comes to Japanese assets, especially when you're thinking about comparing it, say perhaps with China and then that diversification away from what's happening there. But the same time when it comes to the Japanese economy, there's a little bit of skepticism I feel now that I'm in Tokyo about where the economy is headed from here as Japanese people are having a harder time with a cheaper yen and higher costs of living. Are you seeing that divergent and does that matter to investors who are looking globally on where to put their assets? It does. I think the domestic economy, as you mentioned, seem to be pulling out of the long term deflationary trends. Obviously more optimism to start the year, but then we've seen a little bit of a slowdown in the last couple of months. But I would say for for Japanese companies and you think about investing in equity prices again, the the reforms on governance have been done. Also many manufacturers in Japan have now offshore operations. So the currency is less of an impact for them, for example. So I think you've really now seen that in addition to more confidence with, with better governance, proxy voting and a little bit more transparency. And then more recently, you've had the Stock Exchange and others encouraging Japanese companies to be more efficient, more share buybacks, you know, more consistent dividend policy, so returning capital to shareholders which who are more accustomed to that say, for example, United States. Dad, of course, some of the interest in these darling markets of Japan and India has come at the expense of China, right? I'm wondering what are you hearing in terms of the interest and the potential flows into investors wanting some sort of exposure to China despite its ongoing troubles? Yeah, yeah. We are seeing obviously there's been a, a rally this year, you know, particularly in China, but we're seeing investors really searching kind of globally for diversification. As I mentioned earlier, there's been a very large concentration these magnificent 7 names and and indices like the S&P 500, which we have. So, so investors are looking for diversifying emerging markets valuation wise tend to be more attractive in, in, in some cases. But right now we, we continue to see the momentum focused on for example, in the US the Federal Reserve policy. And again from an earnings perspective, you continue to see the large technology names themes like a generative AI continue to dominate marketplaces. But I think those investors who can take perhaps more of a medium to longer term view are looking for emerging and other markets where perhaps valuations are more attractive. What's next in terms of the strategy in the business perhaps beyond core equity indices? Yeah, well S&P Global who owns S&P Dow Jones Indices purchased IHS market back in 2022 and that gave S&P Dow Jones Indices fixed income capabilities. So market leading opportunities and credit both investment grade as well as high yield and particularly using that in certain customer segments like insurance, for example, which is a very important segment for US insurers now using instruments like ETFs more and their general accounts. And then also with higher interest rates in many parts of the world, being able to now use indices more in fixed annuities for the first time really and, and, and and decade plus. So really starting to see the benefits, particularly that merger, but offering multiple asset classes together for diversification benefits. And Dan, of course, we know the Japanese pensions are huge market makers here across the world. What can you tell us in terms of your business partnerships and collaborations with asset managers locally? Yeah, well, it really started with our partnership with JPX over 20 years ago. And then locally, we had a significant partnership start with GPIF, the world's largest, you know, pension fund and starving wealth fund back in 2018, where we partnered on carbon efficient indices. So really bringing more of the sustainability story to this marketplace. And that partnership has grown. We've also, as you said, been able to then also leverage many of the local asset managers of brokerage houses in building, you know, local products, but particularly they want to bring say the S&P 500 and different versions of that. So dividend enhanced strategies have been very popular, you know, with a stronger dollar as well, but also areas to diversify, you know, like fixed income that we talked about. So I think the partnership is growing, but we're starting to see more demand, particularly as more even retail investors through the Nisa programs are moving out of traditional, you know, savings accounts now into investment portfolios. It's exciting.