UBS Group AG is letting go of half a dozen mainland China-focused employees in Hong Kong, as turmoil in the world’s second-largest economy hammers dealmaking, prompting global banks to rein in their presence in the once lucrative market.
The Swiss bank has trimmed bankers in businesses including debt capital markets, investment banking and real estate, the people said, asking not to be named discussing private information. A UBS spokesman declined to comment.
Investment banking revenue for UBS in China has plunged by about half, although gains in Japan and Australia helped prop up its overall Asia business, people familiar said.
Photo: Reuters
New issuance in debt and equity markets has slowed this year following sweeping policy changes in China and slowing economic growth, denting revenue at banks that had ambitious expansion plans for the country.
Rival Credit Suisse Group AG, saddled by major losses, is also preparing large cuts to its investment banking unit and is questioning its long-term plans for China amid slowing growth and geopolitical tension.
Global investment banking revenue at UBS tumbled 57 percent in the second quarter during what chief executive officer Ralph Hamers said was one of the most difficult periods for investors in a decade.
In Asia, UBS has been focused on the sale of Chinese junk bonds to wealthy clients, a business that has almost evaporated as Chinese property developers remain largely shut out of the market amid a deepening property crisis.
Investment banks had been going full steam into China as Beijing opened the door to full ownership of their ventures in the country, counting on reaping billions in profits. UBS boosted its stake in its China securities venture to 67 percent in March after its mainland China revenue had more than doubled to almost US$1 billion last year from 2019.
Now they are facing rougher markets. Offshore bond sales by Chinese firms have slid 44 percent this year to US$63.9 billion, data compiled by Bloomberg showed.
Defaults by property firms including giants in the offshore market such as China Evergrande Group (恆大集團) and Kaisa Group Holdings Ltd (佳兆業集團) have dented investor appetite.
UBS has plunged in the league tables of dealmakers in China offshore bonds, falling 24 places to rank 42nd. The Swiss bank is ranked 45th for Asia high-yield bonds denominated in US dollars, euro and yen, slumping 38 places so far this year, the data showed.
The job cuts at UBS also come as China steps up scrutiny of companies seeking to sell debt abroad as defaults worsen to record levels.
Borrowers, including financial firms, need approval from the Chinese National Development and Reform Commission for issuance of debt with maturities longer than one year, a draft for comments revealed on Friday last week showed. The consultation period runs until Sept. 26.
STEADY: Prices are to rebound following inventory rebuilding demand, TrendForce said, with Samsung Electronics Co further trimming capacity as it slashes DDR4 lines The contract prices of DRAM chips are to rise by as much as 18 percent sequentially this quarter — the first price upticks in about eight quarters — driven mainly by inventory rebuilding demand for DRAM chips used in mobile devices and PCs, TrendForce Corp (集邦科技) projected yesterday. The price rebound is led by a quarterly increase of mobile DRAM chips, which are to climb between 13 percent and 18 percent quarter-on-quarter this quarter, which has not been seen since the fourth quarter of 2021, the Taipei-based market researcher predicted. Likewise, the price of mainstream PC DDR4 DRAM is expected to bounce
SOLID FOUNDATION: Given its decades of expertise in megatronics, manufacturing and robotics, Japan has the wherewithal to create its own AI, Jensen Huang said Nvidia Corp plans to help build an artificial intelligence (AI) tech-related ecosystem in Japan to meet demand in a country eager to gain an edge in this emerging technology. The US company will seek to partner with Japanese research organizations, companies and start-ups to build factories for AI, Nvidia CEO Jensen Huang (黃仁勳) said yesterday during opening remarks in a meeting with Japanese Minister of Economy, Trade and Industry Yasutoshi Nishimura. The company is to set up an AI research laboratory, and invest in local start-ups and educate the public on using AI, Huang said. Huang earlier this week met with Japanese Prime
A Hong Kong court postponed a court hearing on troubled Chinese property developer Evergrande Group’s (恆大集團) winding-up petition scheduled for yesterday until Jan. 29. Evergrande is trying to win support from its creditors for a plan to restructure more than US$300 billion in debt to stave off liquidation. The company’s lawyer told the court it was requesting an adjournment to “refine” its new debt restructuring plan. The Hong Kong High Court has postponed the hearing over Evergrande’s potential liquidation several times. Judge Linda Chan (陳靜芬) had said in October that yesterday’s hearing would be the last before a decision is handed down. Chan
Huawei Technologies Co (華為) is among a field of “very formidable” competitors to Nvidia Corp in the race to produce the best artificial intelligence (AI) chips, Nvidia chief executive officer Jensen Huang (黃仁勳) said yesterday. Huawei, Intel Corp and an expanding group of semiconductor start-ups pose a stiff challenge to Nvidia’s dominant position in the market for AI accelerators, Huang told reporters in Singapore. Shenzhen-based Huawei has grown into China’s chip tech champion and returned to the spotlight this year with an advanced made-in-China smartphone processor. “We have a lot of competitors, in China and outside China,” Huang said. “Most of our competitors