UBS Chief Executive Sergio Ermotti said investors have become more complacent over the past few years even as geopolitical and economic risks continue to build. He said markets should be showing greater volatility under current conditions. Ermotti pointed to energy and shipping risks tied to the conflicts involving Iran and Ukraine, along with ongoing global supply chain strain, high inflation, and elevated borrowing costs. He also said heavy investment in artificial intelligence and data centers has supported economic growth, but has not removed the underlying risks.
On positioning, Ermotti said UBS clients have recently favored diversification across sectors and regions rather than betting on a single market direction, while continuing to allocate to AI and technology assets. He added that this does not mean capital is broadly leaving the United States or the dollar, which he described as the world’s main reference currency. On rates, Ermotti said the European Central Bank, the Federal Reserve, and the Bank of Japan could all raise rates in the coming months, and warned markets not to expect borrowing costs to quickly return to low levels.
UBS Chief Executive Sergio Ermotti said on Sept. 10 that investors have grown more complacent over the past few years even as geopolitical and economic risks continue to accumulate, adding that markets should be seeing larger swings under current conditions.
Ermotti said risks tied to energy and shipping from the conflicts involving Iran and Ukraine remain in place. He also cited continued pressure on global supply chains, high inflation, and elevated borrowing costs. Large-scale investment in artificial intelligence and data centers has helped support economic growth, he said, but it has not removed the underlying risks.
UBS clients are leaning toward diversification
On investment strategy, Ermotti said UBS clients have recently been allocating more across sectors and regions instead of making a single-direction market bet. He said they are still adding exposure to AI and technology assets.
He added that this does not mean money is broadly leaving the United States or the U.S. dollar. The dollar, he said, remains the world’s main “reference currency.”
Rate hikes may still come in the next few months
Ermotti said the European Central Bank, the Federal Reserve, and the Bank of Japan could all raise rates in the coming months. Markets, he said, should not expect borrowing costs to quickly fall back to low levels.
In his view, inflation pressure has not clearly eased, and it is still reasonable to expect interest rates to remain high for some time.
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