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00:00Last time I think you came on Bloomberg TV, you were speaking with my colleague,
00:03because Linda, let's say about six weeks back, you weren't worried about growth.
00:09Stagflation was one of the concerns that you brought up at that point.
00:12Does it still seem the way that we're headed in that direction?
00:15Absolutely. When we spoke last, stagflation risk was there.
00:22I would argue that while risk has come down, there is a continued potential.
00:30Of stagflation. However, things have moved on and I think one of the calls we made early on
00:36and actually already coming into this year around diversification and diversifying across geographies,
00:42currencies, sectors has worked out really well. So diversification, it is, and diversification remains
00:48a key theme for investors and for building better investment portfolios.
00:53Yeah, and I think certainly with the facade of U.S. exceptionalism started to go away,
00:59you are getting more portfolio flows coming out. What are you seeing as far as wealth flows are concerned
01:03to the point you're making on needing to diversify, especially now?
01:07Look, clients are looking at this world coming into 2025 and seeing that having a more diversified portfolio,
01:15thinking about how you allocate capital in different currencies, different sectors,
01:19but of course regionally as well. Look at the European indices, look at Hang Seng just here in Hong Kong.
01:24You look at these indices, you are clearly, if you're thinking about the equity space,
01:28think about diversification, think about the bond market as much as, of course, alternatives.
01:33So fundamentally, we've been very much focused on helping our clients invest on a diversified basis,
01:40and I think that's working quite well. At the end of the day, in an environment with a lot of volatility
01:45and uncertainty, while we have a pause around tariffs at this point in time,
01:50there will be continued volatility. We expect continued volatility.
01:55And in that perspective, I think being diversified, thinking in scenarios, that is absolutely key,
02:00and that's what we're helping our clients think through, work through, and help them invest accordingly.
02:05Is the assumption for rates still to go down?
02:08Well, look, I think we are starting to see inflation numbers come down to some extent, right?
02:15Having said that, there clearly is a perspective of timing around rates.
02:20We do continue to expect that rates will come down. It's a question of time.
02:25And, of course, as we see further data come out, and also, let's not forget the uncertainty we still have
02:32around tariffs and the environment itself.
02:35So, I do feel that while we will see rates come down, it's a question of timing.
02:41Right. And it's puzzling to us sometimes, to your point, you look at the equity benchmarks in Europe,
02:47you look at here in Hong Kong, it's as if nothing happened in April.
02:50You know, we're back to those levels before those Liberation Day announcements were made, and even more.
02:56But the bond markets seem to be dancing to a separate tune.
02:59We seem to be getting higher and higher yields on the long end.
03:03So, look, I think what is interesting clearly is after some of the adjustments and some of the events
03:13that we saw earlier this year, even S&P is at more than 5,900, so actually higher than when we started this year.
03:21And, yes, absolutely, European equity markets, as well as Hang Seng, are doing quite well.
03:25So, in the bond market, our overall long-term rates, of course, are impacted by fiscal policy.
03:34And, of course, also what is to come, specifically in the U.S. when it comes to the U.S. budget
03:39and anything around deficit, and the overall plan that is to be implemented.
03:46I think you're seeing that impact more on the longer rate curve.
03:50Do you get a sense that your clients are concerned about, well, let me phrase it this way, fiscal health of the U.S.?
03:56In other words, their exposure to the U.S. dollar?
03:59You know, if you think about wealth management clients specifically, I think we need to differentiate between institutional clients,
04:05of course, sovereigns, and then, of course, wealth clients.
04:07If your question is around wealth clients, I think generally one of the things that one should never forget about wealth clients is wealth clients have the choice to invest, right?
04:16Yes, they're looking for a risk-adjusted return, but they can easily dial up and dial down in terms of what their cash holdings are and how they're investing.
04:26We very much focus on the long-term view and help our clients build a core portfolio.
04:31And around that core portfolio, we would look at investment satellites.
04:36So core portfolio typically would be your balance-type portfolio.
04:40You can then sort of like try to figure out what your regional or geographical diversification is.
04:45And then satellites would be alternatives, gold, other asset classes that can fundamentally help you deliver better returns.
04:53Do you get a sense that increasingly more of the more allocations from wealth clients are going into alternatives, private markets, gold, what have you?
05:02And how are you positioning the business to be able to deal with those flows, if any?
05:05Look, I think with the entire sort of theme of democratization of alternatives, we've definitely seen a significant growth of alternatives and alternative investments in clients' portfolios.
05:17It is still at a lower percentage when you think about an aggregated perspective of wealth portfolios.
05:23So there's probably still some way to go in terms of diversification into alts.
05:27But, yeah, absolutely, we see continued demand for alternatives within a construction of a portfolio.
05:35Again, we're less about product.
05:38We're much more about advice and how we help our clients diversify and fundamentally create and construct better investment portfolios.
05:46The opportunities in Europe have reemerged this year, I think, to the point you were making earlier on.
05:50Are you getting more interest coming from Asian clients, Asian-based clients, for what they can do in Europe?
05:56I think we just launched our global family office report, which is sort of a survey of some of the most, some of the largest, but also most successful family offices.
06:07And what you're seeing there is fundamentally this perspective that we started out with, which is global, global diversification, global investment,
06:16where, yes, Europe is becoming more interesting, but also Asia.
06:20I was just in the Middle East a couple of weeks ago, and one of the things that became quite clear was a lot of investors in the Middle East want to increase their allocation to Asia.
06:30It's interesting now here at the AIC, out of the more than 3,500 participants, we've got more than 500 participants from some of the most significant family offices and ultra-high investors.
06:41So, clearly, there's this theme emerging of, how do I think about global investing?
06:46How do I think about my portfolio?
06:48And while I was probably overweight a specific jurisdiction, how do I think about balancing that out in Europe and Asia feature in that discussion, just like the Middle East as well?
06:58Let's talk about the business.
07:00Are you happy with the size of the business in the Asia-Pacific?
07:03Are you looking to add or the opposite?
07:05So, look, I think we are very privileged and very grateful that our clients have been very gracious in supporting us.
07:12We had a very strong quarter in the first quarter of this year, record results across the businesses.
07:20I think we have clearly been able to gain market share and grow our business.
07:25And, look, Asia contributes to more than 60% of GDP growth, more than 50% of the world's population.
07:34So, we do believe in Asia.
07:36We have a significant business out here in Asia, and we're very grateful to our clients for the support that we get.
07:43What priorities do you have for the non-wealth part of the franchise here in the Asia-Pacific?
07:47So, we have a very, very strong franchise in wealth, as you know, number one franchise out here in Asia, very strong markets and securities franchise, number one, number two.
07:58Depending on which jurisdictions you count into it or not, we really are very strong in research, and we have been gaining traction in banking.
08:06So, fundamentally, across those key businesses, we continue to invest and continue to build out.
08:11And, of course, let's not forget our asset management business, where we have very strong joint ventures, specifically in China, and are also growing accordingly.
08:20So, I would say across all our key businesses, we've had the privilege and the support of our clients.
08:29There's a decision in Switzerland, first week of March, I believe it's June 6th, on this draft bill, this reform bill,
08:38as far as effectively how much tobacco we'll need to set aside, wondering how you're thinking about that, or is that simply up to regulators for now?
08:47So, look, I think we as UBS have a rock-solid balance sheet, strong capital base, strong liquidity position.
08:53I think it makes us very attractive for clients, and that's why I also think clients entrust their wealth to us,
09:00which is quite relevant and important. We will see when the bill comes out, and then we'll work through that proactively and reactively.
09:08Are there plan Bs? Are there alternative plans that you guys are talking about in the event?
09:14It's a decision not exactly in the interest of the bank? Let's put it that way.
09:20Well, look, we'll wait until the bill comes out, and then we'll work through it.
09:25Let's talk about the here and now. Big conference. How many attendees? I heard it's a record.
09:29It is a record. It's more than 3,500. Asia's back. If you didn't get an invite, you're not joining this conference.
09:37I think you're missing out. It clearly feels like the place to be.
09:40As I mentioned, more than 500 family offices and ultra-investors, a significant amount of key institutional investors.
09:47We've got a great lineup of speakers, great sessions, more than 80 speakers, 45 sessions.
09:52We've got more than 350 corporates that are presenting, which represent more than $9 trillion of market cap.
10:00There's been extreme demand, clearly an increased demand, versus last year or the years before in terms of actual interest around this conference,
10:11but also around the companies that are presenting as much as the speakers.
10:16So, very exciting. Thank you. Thank you for being here.
10:19No, no. Great space. Thank you so much for giving this.
10:21I think you've taken over a few floors here.
10:24Is there any specific panel or theme for conversation that you're looking forward to hearing?
10:30Well, right after this, I'll have the pleasure to kick it off, and then we're going to start with a macro outlook geopolitical.
10:38Today, it's all about macro and geopolitics, and tomorrow, it's all about tech and AI.
10:44So, I think there's going to be quite a lot of interesting things, and we've got Simone Biles, the gymnast.
10:49We just had her with a group of kids and gymnasts yesterday, which was just fantastic, and just listening to that, those screams and that energy is just, I have to say, is always inspiring.
11:03Yeah. I heard you guys did a session with her, right, where the big event is, the big circus is as well.
11:08Final question. You've been in Hong Kong for how long now?
11:10Since August last year.
11:12How do you like it?
11:12Look, Asia is great. Overall, Asia is starting to come back. Things are improving.
11:18I have been absolutely amazed by the friendliness, the openness, but also the pragmatism, the entrepreneurial spirit, and the persistence that you see in Asia across the geographies, China, Hong Kong, Singapore, Japan, and across all of the key markets that we're operating in, including Australia.
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