UBS Chief Ermotti Says Energy Prices Likely to Remain High

(Bloomberg) — UBS Group AG Chief Executive Officer Sergio Ermotti said energy prices are likely to remain elevated as investors digest the impact of the Middle East conflict on the global economy.

“Energy prices are likely to stay high for the foreseeable future, putting some inflation pressure” on the supply chain, he said in a Bloomberg TV interview in Beijing.

Markets assumed a risk-off stance on Monday with equities and Treasuries retreating after US President Donald Trump set a deadline for Iran to reopen the key waterway that’s integral to energy flows around the world. Brent crude has surged more than 80% this year and trades around $112 a barrel.

Ermotti said his firm’s customers aren’t making dramatic changes to asset allocation as a result of the war, though digesting its full impact will take time.

“Clients are still, broadly speaking, calm,” he said. “We don’t see any major shift in asset allocation,” however “this pressure on the economy will start to weigh into the markets.”

Investors are continuing to assess how long is it going to take to digest the shock of this crisis, he added.

“We saw clients already diversifying their portfolios earlier this year,” Ermotti said. “You saw much more dispersion in the way they were looking at maybe shifting away from more the AI technology to a more diversified portfolio. That was a good move considering what we saw in the last few weeks.”

Ermotti said the bank has supported staff relocating with their families when needed for personal or security reasons. He added that operations remain manageable through contingency planning, either at existing bases or with support from colleagues in Europe and elsewhere.

He said that while the bank does not run its business “on a stop‑and‑go” basis, it may “tactically slow certain investments” amid the ongoing crisis.

–With assistance from Adrian Wong.

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