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.
STATE SUBSIDIES: The talks over a factory in Dresden have a top end on par with what Japan is offering TSMC and outdo a cap other firms are being offered in Europe Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is in talks to receive German government subsidies for as much as 50 percent of the costs to build a new semiconductor fab in the country, people familiar with the matter said. The government is in ongoing negotiations with TSMC, as well as its partners on the project — Bosch Ltd, NXP Semiconductors NV and Infineon Technologies AG — the people said, asking not to be identified because the deliberations are private. No final decisions have been made and the final subsidy amount could still change. Any state aid must also
South Korea would avoid capitalizing on China’s ban on a US chipmaker, seeing the move by Beijing as an attempt to drive a wedge between Seoul and Washington, a person familiar with the situation said. The South Korean government would not encourage its memorychip firms to grab market share in China lost by Micron Technology Inc, which has been barred for use in critical industries by Beijing on national security grounds, the person said. China is the biggest market for South Korea semiconductor firms Samsung Electronics Co and SK Hynix Inc and home to some of their factories. Their operations in China
GEOPOLITICAL RISKS: The company has a deep collaboration with TSMC, but it is also open to working with Samsung Electronics Co and Intel Corp, Nvidia’s CEO said Nvidia Corp, the world’s biggest artificial intelligence (AI) GPU supplier, yesterday said that it is diversifying its supply chain partners in order to enhance supply chain resilience amid geopolitical tensions. “All of our supply chain is designed for maximum diversity and redundancy so that we can have resilience. Our company is very big and so we have a lot of customers depending on us. And so our supply chain resilience is very important to us. We manufacture in as many places as we can,” Nvidia founder and chief executive officer Jensen Huang (黃仁勳) said in response to a reporter’s question in
BIG MARKET: As growth in the number of devices and data traffic accelerates, it will not be possible to send everything to the cloud, a Qualcomm executive said Qualcomm Inc is betting the future of artificial intelligence (AI) will require more computing power than what the cloud alone can provide. The world’s largest maker of smartphone processors is transitioning from a communications company into an “intelligent edge computing” firm, Qualcomm senior vice president Alex Katouzian said. The edge in question is the mobile device that a user taps to access a network or service, and Katouzian used his time headlining one of the major keynote events at the Computex show in Taipei to make the case for how big a market that would be. The US company’s chips help smartphones harness