UBS Chairman: Get ready for volatility this year
The Swiss economy may still be coming to terms with a currency shock last week but Axel Weber, the chairman of UBS, (Swiss Exchange: UBSG-CH) has told CNBC that it is major policy divergence between different countries that could deliver a significant slice of volatility for global asset markets in 2015.
"This is going to be a very volatile year," he told CNBC at the World Economic Forum in Davos. He said that central banks are the "major drivers" of policy this year and expected that the U.S. could further decouple from the rest of the world.
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He warned that "something will give in the end" when questioned about major currency movements and was concerned that the European Central Bank (ECB) would fail to solve the region's problems despite being expected to announce a form of quantitative easing (QE) at its meeting on Thursday.
Weber is the chair of the Swiss global financial services company and is also the former head of the German Bundesbank. He said that QE alone would not help Europe's problems and called for tougher reforms that he believed were currently not being dealt with.
Meanwhile, focusing on the Swiss economy, he said that the country should be about to experience an impact on growth with UBS downgrading its own growth prospects for the next two years.
The Swiss National Bank (SNB) rocked markets last week by scrapping its currency peg against the euro (Exchange:EUR=). The Swiss franc surged against the dollar (Exchange:.DXY) and the euro and added to major speculation that bank President Thomas Jordan could have been tipped off on a major policy move in Europe this week.
Swiss stocks have been hit hard with a stronger currency weighing on the amount of foreign sales that the country's exporters are likely to achieve. Weber expected 0.5 percent growth for UBS this year, and 1.5 percent for 2016, he told CNBC.
"It's quite a downward revision," he said. "There is a much stronger Swiss franc now."
