Stagflation Fears Loom, Yet UBS Identifies Key Investment Areas

UBS has issued a stark warning to investors, flagging stagflation as a looming economic threat.

With persistent inflation and sluggish growth, this combination could pose a significant challenge for markets in the near future. Iqbal Khan, the President of UBS’s Asia Pacific division, highlighted this risk during his address at Bloomberg’s Family Office Summit in Hong Kong. According to Khan, the big question on everyone’s mind is whether the global economy is heading into a period of stagnation and high inflation, signaling the potential rise of stagflation.

This warning comes at a time when central banks worldwide are tightening their policies to combat inflation. Trade disruptions and supply chain bottlenecks continue to cloud the economic outlook, adding complexity to financial projections. The ongoing tensions between major economies, notably the U.S. and China, have created further uncertainty, as tariffs on key goods are driving up production costs and fueling inflation.

Despite these concerns, Khan offered a silver lining, pointing out that opportunities still exist within the global economy. He mentioned Europe as a region showing signs of renewed focus, while China and Europe present relatively low-cost investment options, even though short-term challenges remain.

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UBS itself continues to expand in Asia, underscoring its commitment to the region. The company is in the process of developing a new office tower in Hong Kong’s West Kowloon district, scheduled to open in 2026. Khan, who has been instrumental in shaping UBS’s strategy in Asia, also highlighted the bank’s growth ambitions amid intense competition from local players like DBS Group and HSBC.

Despite the prevailing concerns about global inflation and trade disruptions, UBS is advising its clients to remain strategic. Khan emphasized the importance of identifying resilient sectors and regions that can weather economic turbulence. The bank believes that with the right approach, investors can continue to thrive, even as they navigate the uncertainties posed by stagflation and global trade tensions.

Alexander Stefanov