Business / Q and A with CEO

Looking forward to a 'big year'

By Li Xiang (China Daily) Updated: 2016-03-04 07:58

I would say that one has to recognize the ability of regulators to step in and recognize the problems very quickly. Similar occasions take place outside China.

I don't think at the end of the day, investors are concerned about that part of the equation.

More concerns may be about the sustainability of China's growth. People need to understand the outlook for the economy in the next couple of years in order to make better decisions.

How do you see China's effort to reform and gradually liberalize its capital markets and how will UBS position itself to gain a bigger market share in China?

The expansion of the Chinese capital market is a very important trend for the entire economy as well as the banking system.

I think China needs to develop a deep and liquid debt capital market to create alternatives to the banking system. More sophisticated aspects of financing will come in to play and that is where our global reach and knowledge can bring.

In respect of where we want to grow, it is clear that our profit margin is much more into the wealth management. The culture of wealth management in China is not there yet. The culture of diversification and the way to invest money abroad is not there.

China has about $9 trillion of retail deposit and if only 1 percent has exposure to foreign investment, it is still huge.

That is the reason why I am saying wealth and asset management and direct offshore investment has the biggest potential for growth.

What is your view on financial innovation as well as the new investment tools in the Chinese market where financial derivatives have just started to develop but already been blamed for causing market volatilities?

In general, I would be very cautious about blaming any instruments for being responsible for such kind of a movement.

It is not possible for any investors or speculators to generate such a momentum if there is no underline and strong tailwind.

I think derivatives are instruments that of course can be used to speculate but the vast majority of the use of derivatives worldwide is for hedging.

I think it is correct to look at introducing new products and legislations very carefully while understanding that it is an opportunity for China to develop the capital market.

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