UBS CEO Expects Volatility to Continue Rising This Year
UBS Group CEO Sergio Ermotti expects volatility to continue rising for the remainder of the year.
He pointed out that the macro situation, geopolitical factors, current debates, and significant divergence in the stock market, along with pressure from energy prices, could create headwinds for inflation, which investors may not favor.
Event-driven market risk premiums are rising, with funds flowing into safe-haven and hedging instruments, while high-valuation risk assets are under pressure, benefiting from volatility trading.
Source: Public Information
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Sergio Ermotti has continuously emphasized geopolitical and macro uncertainties following the integration of Credit Suisse, previously stating that such volatility could last for a decade, with UBS Wealth Management benefiting from client portfolio adjustments.
The capital path indicates that the bank is investing resources into volatility trading and client advisory services, motivated by converting macro risks into fee and interest income, specifically by emphasizing the linkage between energy and inflation to prompt clients to rebalance.
Similar to past crises, bank executives are warning about long-term uncertainties, as the current global market is in a high-volatility phase characterized by multipolarity and energy disruptions.
This essentially involves the intersection of regulatory changes and capital concentration, with the mechanism being that ongoing geopolitical shocks amplify asset divergence, giving institutions with global allocation capabilities a relative advantage.
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