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Following are excerpts from the transcript of a CNBC interview by Geoff Cutmore and Martin Gilbert, CEO of Aberdeen Asset Management.
GC: I'm pleased that we have with us Martin Gilbert from Aberdeen Asset Management. This is a business that has focused very much on the emerging market opportunity. Martin, nice to see you. Just have a look at the runes for us here, what do you see in the crystal ball for 2016?
MG: Yes, I mean, obviously we've got off to a difficult start, and it's very difficult to really explain why, because nothing really seems to have changed since the end of last year. A bit more negativity, probably, from China, but it's still growing, we like the way it's being run. So I'm reasonably positive on emerging markets, we think the companies will do better this year than last year, so I think long term, and even medium term, it's still a place to have a substantial part of your money.
GC: China's obviously the first port of call when people think about their list of concerns here. We obviously know, disconnect between the real economy and what's happening in the Chinese stock market, relatively immature equity markets in China, but there is this, sort of, sneaking suspicion that the growth story that we were promised won't be delivered either.
MG: I think they're still growing at a reasonable rate, I mean, close to 7% is still good but you're quite right, I mean, we mustn't mix economic growth with how the stock markets perform, and I think part of the problem is China's corporate governance. So we still find it very difficult to find companies to invest in for the long term, and a lot of the money that's coming into the market and going out is really short term money at the moment, and they've found it quite painful trying to keep the market up, when in reality you should just let it find its level and then people will come back in. So let it come down quickly and take the pain over the short term rather than try and keep it up.
GC: You're generally positive, clearly, on the outlook here for emerging, but frustrations, you know, in Latin America, a lot of governments haven't taken the opportunity to do necessary restructuring. Governance concerns, as well, about how governments are operating at this point, plus there is this worry about the level of dollar denominated corporate debt=,
GC: That sits out there now that the Fed has started lifting interest rates. These are all valid concerns.
MG: Yes, no, absolutely, and Brazil being the prime example in Latin America, where we, where the currency, we think, has probably reached a floor, but it's certainly been painful because of government action or inaction, but against that, I sort of point to India, which is quietly growing at 5, 6, 7, whatever it is, good companies where we've made a lot of money over the last few years, and Argentina which has now-, after the election, looks as if it could be on the way back into the investment fold.
GC: So let's talk about the business. It's not broken, is it, your model?
MG: I hope not! No, no, far from it. I mean, yes, we made close to £500 million profit last year, and obviously this year is going to be a bit more difficult because of the massive outflows we've seen since about 2013, so we've had really two and a half years of a bare market in emerging markets, coupled with, I think one of the unintended consequences, or something most people didn't foresee was that the lower oil price would make the sovereign wealth funds dip into their reserves they'd put away for a rainy day, and this is a rainy day for a lot of these big oil producing nations. So again, that's hit the big fund managers like ourselves.
GC: While we're on the subject of fund managers, should some of yours be nervous that they may not have their jobs for much longer? My understanding is that you're taking a good look at the passive market and you may make some acquisitions there. What can you tell us?
MG: Yes, no. I mean, no, the fund managers have nothing to fear, because the one thing you need as a fund management group are good fund managers, and we're very fortunate, we have some fantastic fund managers who we've brought on since they joined us from university, so it's very much a build our own, but there is a place for passive in this world, but I don't see us going into ETFs, I think we'll leave that to the really big boys, because not many people make money in ETFs, but passive, low risk, low cost is a very genuine product going forward.
GC: Could we expect a major acquisition to be announced over the coming weeks?
MG: Well, I'd love-,
GC: Is there anything you're working on?
MG: No, I wish I-, I wish we did, but we don't, and I wish there was something like a SWIP, which we bought in 2014, which has transformed our business, given us a big fixed income, a big property and a big solutions business, so those are the areas we're looking to grow, but not to the detriment of emerging markets, we still love emerging markets as a company.
GC: And just on the product story, we've obviously been talking a lot about FinTech here at this World Economic Forum, with Klaus Schwab's Fourth Industrial Revolution headline. Do you fear the robots? The robotic asset allocation models? What do you do? Do you buy them, or do you build your own?
MG: A mixture of both. I mean, clearly as a CEO, your job is to be worried about everything, and if you're not, you're complacent and you'll soon get into difficulty, so what we've done is we've bought, and I sort of look back to Internet banking where the banks became Internet banks, and I think the fund managers who have the clients, a bit like the banks, will become robo-advisors and use platform technology.
GC: And just a final word for our retail investing audience who will have money parked in some of your funds here. Clearly you are the head of the business, so they've got to take on board the perspective that you bring, but you've seen some market cycles as well. Extraordinary that we have this nervousness at the moment and this selling down, even as the Fed has begun to normalise interest rates.
GC: Could you just, you know, offer up a few words of experience about what those retail investors should be thinking and should be doing with their portfolios?
MG: Yes, whatever they-, whatever, don't panic, that's my clear message, and don't cut at the point of maximum pain. The money in equities tends to be made the days after the really bad days, so you've just got to hold your nerve, not look at the markets and have a cup of coffee and just relax.
GC: Look, Martin, you're probably not short of a bob or two, I imagine, but what would you be buying today? When you look at the prices of assets around the world, what would be going in to the Martin Gilbert pension fund?
MG: Well, I'm a big believer in Asia and emerging markets, so I just love Asia, and I've always, since we first started the business in '83 and opened in Singapore in '92, I've always put all my money into Asia. I love the work ethic and emerging markets. That's where the growth's going to be, and the companies will come back, and it's always a good time to invest, when no one loves them.
GC: Nice to see you, Martin, thanks so much for joining us.
MG: Great to see you again.
GC: Martin Gilbert, then, from Aberdeen Asset Management.