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.
ADVANCED: Previously, Taiwanese chip companies were restricted from building overseas fabs with technology less than two generations behind domestic factories Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp, would no longer be restricted from investing in next-generation 2-nanometer chip production in the US, the Ministry of Economic Affairs said yesterday. However, the ministry added that the world’s biggest contract chipmaker would not be making any reckless decisions, given the weight of its up to US$30 billion investment. To safeguard Taiwan’s chip technology advantages, the government has barred local chipmakers from making chips using more advanced technologies at their overseas factories, in China particularly. Chipmakers were previously only allowed to produce chips using less advanced technologies, specifically
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
TARIFF SURGE: The strong performance could be attributed to the growing artificial intelligence device market and mass orders ahead of potential US tariffs, analysts said The combined revenue of companies listed on the Taiwan Stock Exchange and the Taipei Exchange for the whole of last year totaled NT$44.66 trillion (US$1.35 trillion), up 12.8 percent year-on-year and hit a record high, data compiled by investment consulting firm CMoney showed on Saturday. The result came after listed firms reported a 23.92 percent annual increase in combined revenue for last month at NT$4.1 trillion, the second-highest for the month of December on record, and posted a 15.63 percent rise in combined revenue for the December quarter at NT$12.25 billion, the highest quarterly figure ever, the data showed. Analysts attributed the
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) quarterly sales topped estimates, reinforcing investor hopes that the torrid pace of artificial intelligence (AI) hardware spending would extend into this year. The go-to chipmaker for Nvidia Corp and Apple Inc reported a 39 percent rise in December-quarter revenue to NT$868.5 billion (US$26.35 billion), based on calculations from monthly disclosures. That compared with an average estimate of NT$854.7 billion. The strong showing from Taiwan’s largest company bolsters expectations that big tech companies from Alphabet Inc to Microsoft Corp would continue to build and upgrade datacenters at a rapid clip to propel AI development. Growth accelerated for
RSS