UBS CEO warns markets are overly optimistic on Iran conflict

UBS CEO Sergio Ermotti has warned that financial markets are at risk of being overly optimistic about the conflict with Iran. He said that markets not only expect the situation to be resolved but also believe its impact will be managed in a traditional manner. This comes as U.S. stock markets have reached all-time highs, despite the conflict's continued escalation and the lack of any signs of a sustainable solution. Ermotti stated that while the market is quite optimistic, he hopes this optimism proves to be justified, emphasizing that a diversified asset allocation can hedge against the risk of a potential reversal. Separately, he addressed a new capital regulation system under review by the Swiss parliament, refuting claims that UBS is lobbying aggressively for deregulation. He clarified that the bank is not engaged in strong lobbying but is simply representing the interests of its shareholders.