UBS has doubled the number of relationship managers covering Apac from London in the last 18 months, as client demand rises.
Amir Sadr, emerging markets lead at the firm’s wealth management unit, said this increase is partly linked to the UK government’s decision to grant an easier path to British citizenship for three million residents in Hong Kong.
‘We are seeing many individuals taking up this offer to relocate to the UK. We are well positioned to support these families in many of their financial requirements from investing to structuring and lending,’ he told Citywire.
Although Sadr couldn’t comment on new hires, it is understood that the team has increased its number of relationship managers from two to five to serve the Apac client segment.
This compares with a 2% decline in the number of relationship managers the wealth manager had locally in the Apac region in the first half of the year, which currently sits at 876.
UK appeal
Sadr said the UK’s common law and its clear rules and regulations around ownership of assets are particularly appealing for wealthy clients from emerging markets, and Brexit hasn’t diminished the attractiveness of the financial hub.
‘We take these things for granted here, but for clients in some of the emerging markets this continues to be a very attractive proposition and even more so now, given what is happening geopolitically around the world.’
Another fast-growing segment for UBS in the UK is non-residential Indian clients, who often run international companies with branches in the UK, Africa and Dubai, for example.
‘Many of these clients are successful entrepreneurs in various industries, for example, healthcare, hospitality and real estate,’ Sadr said.
The team is now looking to add new relationship managers for this client group, which Citywire understands delivered double-digit growth year-on-year.
When asked about other potential growth drivers in the emerging markets space, Sadr mentioned Israel, where start-ups have surged in the last decade, and Turkey.
Eyes on value
Non-residential Indian clients are among investors who often require sophisticated investment advice, and this is where Sadr’s cooperation with the CIO office, led by Mark Haefele, is important.
The investment team has identified the UK equity market as one of the best performers this year, and its wealth management team currently holds a strategic overweight to the space.
‘The UK market has a lot of exposure to value stocks like financials, energy or mining stocks. Additionally, the fall in sterling has supported the results of UK FTSE 100 companies, as a large proportion of their earnings come from abroad,’ Sadr said.
However, the market environment is far from perfect, with looming recession risks and overall uncertainty pushing some clients to increase cash positions.
According to the latest UBS results, transaction-based income decreased by 17% to $793m, mainly driven by lower levels of client activity, particularly in the Americas and Apac.
Although Sadr couldn’t comment on these specific business lines, he also noticed that generally, clients have become cautious due to the economic slowdown, concerns about inflation, as well as the war in Ukraine impacting already stretched global supply chains.
‘However, despite the market drawdowns we have seen this year, clients are not, in general, liquidating portfolios. They are mostly rebalancing to take a more defensive stance,’ he said.
Opportunities ahead
Despite current market volatility, equity valuations are looking tempting for investors with a long-term view. Sadr said we are currently looking at numbers not seen since the 1960s.
‘Based on historical data, a trailing P/E of 17.4x on the S&P 500 has been consistent with annualised returns in the 7-10% range over the next decade.
‘This is a significant improvement versus end-2021, when a trailing P/E of 24.4x was consistent with subsequent returns in the 1-4% range,’ he said.
He doesn’t encourage investors to go full-steam into tech, but said there are other opportunities to explore in the value space. He also highlighted the performance of macro hedge funds, following the dwindling support from central banks.
‘The big question on everyone’s mind is if the US is going into the technical recession, we do not know. The inflationary risk is a big part of that.
‘However, whilst near-term uncertainty is elevated, this year’s selloff has created investment opportunities for the longer-term investors,’ he said.
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