Recovery in the financial markets will probably be volatile due to political risks and because some structural problems in Europe haven’t been addressed, UBS AG Chairman Axel Weber said.
“Whilst the underlying trend is better, there is still a lot of volatility in the market and it’s not going to be a straight-line recovery,” Weber said during a Bloomberg television interview in Davos, Switzerland today. “It’s going to be bumpy, and therefore investors need to be prepared for that push-back, for the mood in the market to turn.”
Sentiment has improved since the European Central Bank said it would “backstop the system,” Weber said. Market confidence over the year may be impacted by uncertainties stemming from elections in Italy and Germany as well as Spain’s need for a “huge amount of liquidity” as its bonds mature, he said.
“I think we’re going to have a very volatile situation where risk-on, risk-off periods will just alter,” Weber said.