Bloomberg Audio Studios, podcasts, radio, news. This is the 26th annual GCC here in Shanghai. We've been covering a lot of them and we are very pleased to bring in the guest of honor. Not the guest, he's the host. I'm the guest here at the GCC and that is Sergio Ermotti, UBS Group CEO. Thanks so much for having us here this again. What is your message to the 3,600 or thereabout participants here at the GCC this year and what's your general outlook for business in China for your bank?
Well, actually it's also great for me to be back here. Last year was quite an important year for China. I think that we saw a huge interest coming back on the Chinese markets. Stock performance was great and we see it today. We have almost 3,600 participants across the board from corporates, institutional clients, family offices, and coming from all over the world we see more interest from overseas, which is indicating the momentum of the Chinese market. So I think we believe this is going to continue. The secular trend supporting China in terms of growth in innovation, technology, biotech is here to stay and investors are realizing that.
What kind of deal flow though are you starting to see as we are starting to see China get some momentum? You talked about the stock market, the CSI 300 up about 17% last year. So it is gaining some steam, but also outbound deal flow seems to be growing quite a bit. Whether it's investing in factories in Europe or in the global south, it seems like capital is not only coming into China where foreign interest is obviously looking at that rebound, but also the capital is moving abroad.
Yeah, I mean look, it's a good mix of businesses. When you look at the underweight of international investors to China, almost half from around 2.5% in 2024 to 1.3% or so in 2025, this is a significant change on a year-on-year basis. This is the main driver. We continue to see a lot of activity around IPOs, particularly the record IPO issues last year in Hong Kong which are probably going to stay with us also in 2026. We see a lot of activity across Asia, inbound and outbound M&A in Japan is up threefold. So in general, you will continue to see momentum of Chinese investors investing abroad but also capital coming into the country.
What's going to be your priority on shore for 2026? Last year you got the full 100% securities license. What's going to be the priority?
Yeah, we are working on all of this. Last year we also made a capital increase in our local entities and this year we are now planning to launch a panda bond. So I think we want to continue to foster our presence in China. We have been in mainland China for 35 years. We have been in Hong Kong for 60 years. This is really part of our core business. If you think about it, we are managing in the region more than a trillion of assets, 800 plus in wealth management and 250 in asset management. We want to continue to reinforce that position, but at the same time our leading position in the investment bank across the board where we are a leader in the region and in China mainland China particularly, and also in asset management through our very successful joint venture with ICBC.
Well, can you tell us about the arranging of that panda bond? The size and timing and the likes?
This is still to be determined, but the decision has been taken to issue a panda bond.
So onshore versus Hong Kong or greater China. What's going to be the emphasis onshore as far as hiring? I mean, you're very strong in wealth management. Obviously, asset management. What's going to be the priority?
Well, look, this year our goal is to continue working with local universities, hiring young talents. We employ around 1,300 people in China, half of them are in Shanghai and the rest in Beijing and Shenzhen. We will probably hire around 100 people this year in China. As I said, we are investing not only in seasoned professionals but also in the young generation for the franchise. Obviously, you still have some personnel issues on the cost reductions from the integration with Credit Suisse. That's separate from what we plan to hire across Asia and in China.
Yeah, look, when I look at Asia in general, the integration is over, it's done. We completed the integration in 2024 mainly in Asia across the board. Investment bank has been closed and asset management the same. As I just mentioned, we are hiring both in China but broadly speaking also in Asia in Japan, for example. We've been expanding our capabilities and leveraging the complementarity of Credit Suisse and UBS together, where we not only have a broader footprint in terms of capabilities but also of geographic footprint.
How would you assess how your businesses in Asia are doing versus other regions, whether it's Europe or?
Look, Asia has been growing very fast. It is probably the biggest engine of growth in nominal terms, accounting for around a quarter to 30% on average in the last 5 years of our profits. As I mentioned, we manage more than a trillion of assets out of the 7 trillion we manage globally. So it's a growing, steady growing business. When you look at the engine of growth, GDP growth is definitely going to help. 4.5% in China is quite important, but it is a driver for growth in the entire region. We are selectively gaining some market shares in areas where we want to compete. Last but not least, this monetization, this IPO calendar is very important to our wealth management business because it is really helping us to drive new money and new assets into our wealth management franchise.
Well, speaking of that IPO pipeline in Hong Kong, it's been quite strong. A lot of the new economy companies, but there are also concerns of the new economy companies, whether it's Miniax or others, that profitability, just like the AI companies in the United States and western markets, the sustainability is not necessarily, it doesn't have a lot of visibility. What's your views on whether we're in a bubble and how long that potentially could still last?
I don't know if we are in a bubble or not, but of course when you see this kind of multiples and performances, you have to ask yourself if this is a repeat of what we saw in another time, 2001? Exactly, the TMT bubble and so on and so forth. I would say that first of all, our advice is very clear: diversification, no concentration of risk around this sector. The technology is here to stay. But we should not really mix the two issues. From an investor standpoint, it's very important to diversify, not to get into a trap of trying to pick the winner or the loser. The truth of the matter is that the first wave was probably around the technology sector. Now we're going to see how embracing and implementing AI can help other parts of the economy become more vibrant and efficient, and that's probably going to be the next side of the story.
You also have to, you can't discount the fact that most of the deal flows right now are in China. The interest is in these new economy companies. So could you kind of quantify the type of deal flows, whether it's underwriting or other types of businesses or services from your bank, that are tied directly to what has been a priority of central government policy makers here?
