Transcript:

What happens with the Chinese economy? How much does it slow? Very, very difficult forecast to make.

I was in Beijing a few weeks ago and meeting with a number of senior, kind of, government officials and other very—let’s put it this way—plugged-in constituents in that market. And I think the one takeaway I walked away with is: the goal of that government is economic stability. They’re willing to take somewhat slower growth, but not too slow, that it unsettles that stability. And that they’re going through this process in their economy of going from a kind of materials-led growth period, whether that’s construction or infrastructure or exporting steel to other countries, to more of a consumer-led economy. And that transition has been under way for a number of years, but that takes years for that to happen.

The Chinese government has some policy options at their disposal. They have the ability to unilaterally implement policies, unlike our system, where you have maybe competing economic or competing political parties impeding certain policies. They’re much freer to implement what they see that it’ll help, kind of, sustain that growth. And that’s, I think, why I’m less anxious about emerging markets, because I don’t think the Chinese authorities are going to let growth just fall off a cliff.

China is slowly opening up their domestic stock market to foreign investors. Gradually, they are trying to open that up because they want the capital, right, to support their economic growth. They want to be more integrated in the world economy.

And as an outside investor, it’s actually a very interesting proposition, because there’s huge market cap, driven by retail investors, right, who are very sentiment driven and not very sophisticated in how to really value assets. So, to me, it kind of looks like the opportunity that was in the US market in the ’60s: for active managers to come in with real, I would say, kind of, expertise in how you value assets. Taking a longer-term perspective. And so, we think there is a lot of alpha opportunity in that marketplace.

Of course, clients are very concerned about the near-term trade war and the impact of that. And that will certainly disrupt things; it already has disrupted for some period of time. But you really have to look at this over a 10-year, 15-year time horizon. And so, we’re excited about taking, kind of, our technology and know-how, and applying that in that marketplace.