The re-election of Xi Jinping and the anti-business reshuffle in the circle of power around him have sent share prices on the Hong Kong stock exchange and the value of the Chinese currency plummeting.

The Swiss UBS, meanwhile, is not deterred by the march through of China's aggressive ruler.

The world's largest wealth management bank is sticking to its growth plans in China, as CEO Ralph Hamers made clear in a conference call with journalists on Tuesday.

Xi's re-election was expected and "also has positive sides," the Dutchman stated unperturbed.

John Knight

Correspondent for politics and economy in Switzerland.

  • Follow I follow

Hamers referred to the leitmotif of “common prosperity” postulated by Xi in August last year.

Accordingly, excessively high incomes should be regulated and returned to society.

Hamers said that if wealth were distributed more evenly among the population, this should open up interesting business opportunities for UBS.

"That's attractive for an asset manager." In investment banking, too, they want to continue as before in China.

Both lines of business there are not very capital intensive, added Hamers.

He expects the blockades resulting from the rigorous zero-Covid policy, which has severely slowed China's economic growth this year, to be lifted "over time".

UBS strong in Asia

UBS is by far the largest wealth manager in Asia.

The quarterly report does not reveal the extent to which Xi's anti-business course has already affected Swiss business.

The bank does not report individual results for China.

But pre-tax profit for wealth management in Asia as a whole fell 19 percent to $237 million in the third quarter.

On the other hand, UBS has succeeded in bringing new fee-generating client deposits on board of almost USD 7 billion net in this region.

According to Andreas Venditti, analyst at Bank Vontobel, this reflects the typical behavior of Asian investors: In difficult market conditions, they are much more willing to place their money in the hands of professional asset managers.

Well-heeled private clients around the world entrusted around $17 billion in new assets to UBS in the third quarter.

In the business with large professional investment clients (asset management), net new money inflows amounted to 18 billion dollars.

Despite this, total assets under management fell by nearly $200 billion to $3.7 trillion due to the sharp downturn in stock markets.

This pushed down the fee income resulting from this investment portfolio.

The company's pre-tax profit fell 19 percent to $2.3 billion and net profit fell 24 percent to $1.7 billion.

In view of the difficult market conditions, analysts had expected a much sharper drop in profits.

But UBS did better than expected everywhere, including in investment banking.

Moreover, it did not feel compelled to make significant provisions in the lending business.

As a result, the UBS share price rose by 6 percent to CHF 16 on Tuesday.

The results of the Swiss industry leader will shine even brighter when Credit Suisse presents its figures on Thursday.

The rival is deep in crisis and, according to analyst Venditti, will end the third quarter with a loss of CHF 660 million.

While Credit Suisse will probably need a capital increase sooner or later, UBS wants to buy back its own shares worth around 5.5 billion dollars this year.