Franklin Templeton CEO Says There Are Deals in China

Lots of money is sloshing around in this spot of the law, especially with the sovereign wealth funds, but there's also a lot of competition. How do you nail those deals eventually? Ultimately you think, well actually Franklin Doubleton has been in this region for over 25 years. So we know well we acquired in 2007 a local asset management company. So now we're one of the biggest TCC bond managers. We're one of the largest multinational Sharia managers. So you know we're really steeped in in the culture and the and the business here in Florida. The top 10 sovereign wealth funds are here. So then it's about what do you have that they're interested in and with the alternative capabilities that we've built out, fortunately that's been an area of great interest. How does the region fit into your longer and bigger strategy as you navigate the company from active to passive? Well we're very much focused on active management. So we we're we're fans of active management. You know we're we're, we're passive has done well is on the equity side, fixed income is still pretty active and obviously the alternatives not. So you know again we're looking we're we have clients in 160 countries. So our job is to have capabilities that work for any of our clients. And as these sovereign wealth funds which often think very multi generational sort of real long term investors, we see that our private market capabilities has actually been probably more at the forefront of their interest. But then in the central banks here they tend to be much more conservative. So the traditional fixed income capabilities and equity capabilities are you know areas of interest for the central banks. The thing is when you take a look at sovereign wealth funds for instance there's growing interest in private credit in alternative assets. Is there a sense that perhaps you might have to do acquisitions in this part of the world to meet the needs and the interest growing appetite? Well, fortunately for us, we did do an acquisition in 2007. It's traditional fixed income, but actually we had a client, a sovereign wealth fund saying they were interested in Sharia private credit. We were able to have our local team reach out to our private credit team and say why don't we work together and deliver this. We'll do this Sharia screen and you manage the private credit. So you know, we think of all the different investment capabilities as we have as ingredients and we can build customized solutions for clients. Jenny, I also want to talk about China because not too long ago when you spoke, you were talking about how there's been so much pessimism price into the Chinese market. We've seen some improvement. How are you assessing the potential there? Yeah, I mean I think there's been a lot of pain obviously in the Chinese market and you've seen it with with where the the you know, the equity markets went. Again, it's the second largest economy in the world. They've been very focused on growing their domestic economy and that therefore creates opportunities. We've had a joint venture in China for over 20 years with local investment people on the ground. When you're in a local market, you can understand where there's growth and where there is a growth and that creates investment opportunities. And I think the thing that we've seen with China is when when the the government of China wants to do something and they have indicated that it's important that they have a robust market, they can provide the kind of incentives and catalysts to do that. So you know we think China is has has gone through a lot of pain, but there's still opportunity in segments of China. Have you seen the West in Chinese property market. So the Chinese property market, it's interesting you know again where where there's pain there could be opportunity. I was talking to somebody who says the wealth channel in China, that families who have lost money in the property market are realizing they need to have a diversified portfolio. So they're just starting to diversify out of some of the real estate into other parts. Again, as a manager with with investment teams on the ground, that's a great opportunity for us. Of course, we're all keeping an eye on that US election and we have a Trump 2.0. Jenny, would it change all the assumptions you're making right now about investing in China Because we saw how the Trump administration caused a lot of pain. We saw how the yuan slum during his administration. You know I what I think that potentially could be underestimated is the the entrepreneurs ability to figure out how to navigate these kind of environments. And in speaking to folks in Hong Kong and who handles supply chains and others, there are a lot of mid sized companies in China who have figured out that they can set up their last stage of manufacturing in a Vietnam and Indonesia, Malaysia and and just assemble enough to meet say the WTO requirements and then it's stamped made in Vietnam for example and then it gets imported into the US and bypasses those tariffs. So you know look I there's no question that there's a shifting of supply chain that's going on that naturally has to happen. But I don't think it's, I don't think it kills the Chinese economies. I don't think it trust Trump administration necessarily is going to you talk about the shifting of supply chains and a lot of the countries in this part of the world in Asia have benefited as a result. Are you seeing attractive markets right now that were not considered before? Well certainly you know in Asia a lot of those smaller markets that I just mentioned are getting the benefit of this China plus one supply chain story. I think you know, obviously in in this region, you know with the price of oil where it is and I don't think anybody sees a quick ending to Russia, Ukraine. So chances are oil stays high. There's a real desire to diversify the economies here and make investments in technology, AI, renewable energy, all those become, they're looking for partners. So all those become an opportunity to make investments.