UBS isn’t happy with China’s attempts to stem capital outflows.

It’s bad for business an executive at the Swiss bank said as it opened a branch of its wealth management business in Shanghai on Thursday.

Despite plans for greater market liberalization, the depreciation of China’s currency has led Beijing to temporarily suspend initiatives designed to open up outbound investment.

In January, sources told Reuters that Chinese regulators had asked several domestic funds to postpone issuing new outbound investment products to stem capital flight, which was undermining the value of the yuan and worrying global investors.

“The biggest challenge here is the pace of deregulation,” Kathryn Shih, Asia pacific president at the world’s largest wealth manager, told Reuters.

The Qualified Domestic Institutional Investor (QDII) program, which allows Chinese banks, insurers and mutual funds to buy offshore stocks and other securities on behalf of clients and is one of the ways Chinese firms and individuals can get money out of the country legally. However, recently authorities have slowed down the pace of the program, reported Reuters.

“There was a lot of deregulation last year, people were talking about QDII2, but with the market volatility some of that has slowed down, so that’s challenging for us,” Shih said.
UBS wants more of the QDII quota made available in the market so that the Swiss bank can offer products from global markets, she added.

The push by UBS into China comes against a backdrop of challenging conditions such as interest rate pressure and lower activity in investment banking advisory business, highlighted by its chief executive Sergio Ermotti on Wednesday.

And despite the strong domestic competitors UBS plans to invest long-term in the Chinese market, deciding that in order to get its name known it had chosen a strategic location in the middle of Shanghai’s commercial center to plant its flag.

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