Wall Street leaders share fears with global financial services peers
investmentnews.comFragile markets, shadow lenders, international tensions and too many wars — global bankers gathering in Hong Kong were meant to discuss how they’re adapting to the financial world’s “complexity” and ended up dwelling on the potential for big blowups instead.
“My biggest fear is there’s one more geopolitical escalation and there’s a market event,” Deutsche Bank Chief Executive Christian Sewing said at the Global Financial Leaders’ Investment Summit in Hong Kong on Tuesday.
At one of the largest gatherings of industry bosses since the Israel-Hamas war broke out last month, the mood on stage was dour as banking and investing chiefs traded observations and fears. The event, hosted by the Hong Kong Monetary Authority, aimed to explore the theme “Living with Complexity.”
Bridgewater Associates co-chief investment officer Bob Prince warned that markets are “under-discounting” how long interest-rate tightening in the U.S. and Europe will last in the fight against inflation before an equilibrium is reached. Meanwhile, Citadel founder Ken Griffin said world leaders are already risking reigniting runaway prices.
Deglobalization is a “giant wild card,” Griffin said, urging listeners not to give up on investing in China. While economies have benefited from peace and globalization, “we don’t know what a world looks like that involves deglobalization,” Griffin said. That includes “how much that increases inflation systemically.”
The growth of shadow banking — typically referring to lending by money managers and other nonbanks to corporations and consumers — drew a few warnings. Roughly half of global financial assets are now in “the shadow sector,” UBS Group Chairman Colm Kelleher estimated.
“It’s a real cause of concern,” he said.
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