The rising middle class in Africa will result in a number of projects for which Malta could be the base – but it needs to be patient and build up its profile slowly, executive vice president of Franklin Templeton, Gregory McGowan, said.
“The lower class in Africa is rising very quickly and they are going to need the same products as those in Europe do and which those in Asia are also seeking now. So there is definitely an opportunity there in my point of view.
“When the Japanese came to Europe, they used Luxembourg – but there is a whole new wave of financial institutions coming this way now. Why not get in the mix and see if you can compete with the other jurisdictions?” he said.
“I think it is a great opportunity to be very open-minded and creative. It can have tremendous dividends. These things take a long period of time; they do not happen overnight. But, if you set your goals, it would certainly be achievable.”
Sources involved with encouraging his visit to Malta gave a frank assessment of the window of opportunity: “No jurisdiction has yet been established as a pathway to Africa. Mauritius has political issues and Dubai is also not perceived as a safe jurisdiction from an investment point of view. All in all, Malta is geographically closer and is a member of the EU. It could be very well positioned for some kind of bilateral agreements with countries to attract international players who have an eye on Africa,” the sources said.
Franklin Templeton, which traces its roots to 1947, is one of the world leaders in asset management with over $900 billion under management, on behalf of over 25 million private, professional and institutional investors. Mr McGowan was in Malta for a preliminary visit to check out its potential but was coy about his impressions.
“We do a number of jurisdictions around the world, so it is not new to us to be evaluating on a constant basis what is new and different out there. Change is the essence of our business. We have to keep on top of what is new and different and to assess it and see if it fits it with where we are going in the future.
Everyone is chasing yield which brings its own danger and risk. The best we can do is make sure that we clearly explain to our clients what the risks involved are
“We are still collecting all the information but there are new things going on in the world. There are major financial institutions from all over Asia coming west. Perhaps Malta fits into that programme,” he told The Business Observer.
He ticked off a number of things which could be of interest, from product development to fintech.
“Can fintech companies get licences here? That could be of interest to our clients or to us,” he pondered.
Mr McGowan explained Franklin Templeton’s approach: “We tend to focus mainly on publicly traded securities. But we do have other pockets that are quite substantial. We are always looking for opportunities. Clients come to us with a list of factors they want and we evaluate where that best fits within our organisation. And if we cannot do it, we look at where else we could do it. We are pragmatic like that.”
He expressed very favourable first impressions of his meeting with the Malta Financial Services Authority, saying this was a key factor in any decision about future collaboration: “The most important thing from my point of view is the ability to have an ongoing dialogue with the regulator and for him to see the point of view of the business. That is more important than taxes. We need to be in a jurisdiction where our point of view is accepted or at least considered in a very professional manner and from what I am seeing, this is the case here,” he said.
His visit here comes at a difficult time for those seeking a return on investments. He said that for some time the coverage of stocks had been declining, which was a big concern for markets which require not only the ‘ask’ side of transactions but also the ‘bid’.
“It is a concern globally but particularly in the US where the coverage is getting less and less. Quantitative easing can be both a benefit and a detriment. If money leaves the banking system, it has to go somewhere. Money market funds successfully disintermediated banks many years ago and this was actually the catalyst for growth in the industry.
“Everyone is chasing yield which brings its own danger and risk. The best we can do is make sure that we clearly explain to our clients what the risks involved are. That is always a challenge and we always need to be vigilant that we are disclosing the precise risk involved with their investments.”
Indeed, Franklin Templeton takes a conservative approach, for which he makes no apologies: “It can be boring but most investors that work with us expect to have their money managed carefully. They expect us to put their interest in front of anyone else’s – including our own. We are ‘steady Eddies’ and I think that is why we have a fairly solid shareholder base which tends to stick to us,” he smiled.