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Title Speaker Date


Dr. Michael Hasenstab: Finding Opportunity Through Volatility. What's Ahead for 2014?

Apr 17, 2014

Featuring:  Dr. Michael Hasenstab, Franklin Templeton Executive Vice President, CIO, Global Bonds

  • We recognize there has been a period of elevated volatility in the global market and we have spent quite a bit of time this year on the ground evaluating and challenging some of the reasons behind that volatility.
  • I think the important thing to understand with emerging markets is that they're no longer uniform. What is happening in Turkey vs. what is happening in Korea, are completely different.
  • We viewed this period of volatility in the markets over the last couple of months as an opportunity to take advantage of the fact the market was not differentiating between fundamentals and was treating the entire fixed income asset class uniformly.
  • In our view, there's a big difference between a moderation in growth in China, which quite frankly we think is a healthy dynamic, because we are seeing better quality and less quantity of growth and a hard landing scenario there.
  • The one child policy put in place decades and decades ago in China is now moving into the working-age demographic, leading to a shortage of labor. And any time one runs into a shortage of something, the price of that goes up.
  • We've seen wage growth in China pick up dramatically: stronger wage growth is providing a core anchor of increased consumption.
  • Moving tens of millions of people from the rural sector to the urban sector is going to require a tremendous amount of investment; that investment, we believe, will support China being able to grow.
  • We are doing what we've always done which is go out to these countries, understand the underlying fundamentals and position ourselves in periods of panic.
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Important Legal Information

The information provided in this video is not a complete analysis of every material fact regarding any region, country, market, industry, security or fund. Holdings are subject to change. Opinions expressed are as of April 17, 2014 and can change without notice. An assessment of a particular country, market, industry, security, investment or strategy is not intended as an investment recommendation; it is intended only to provide insight into the speaker’s views and portfolio selection process.

What Are the Risks?
All investments involve risks, including possible loss of principal.

Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in emerging markets, of which frontier markets are a subset, involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Because these frameworks are typically even less developed in frontier markets, as well as various factors including the increased potential for extreme price volatility, illiquidity, trade barriers and exchange controls, the risks associated with emerging markets are magnified in frontier markets.

Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in an investment portfolio adjust to a rise in interest rates, the value of the portfolio may decline.

Investors should carefully consider a fund's investment goals, risks, charges, and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial advisor, call us at (800) DIAL BEN / (800) 342-5236, or visit franklintempleton.com. Please carefully read a prospectus before you invest or send money.

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