UBS Economist's 'Chinese Pig' Comment Hits a Nerve -- Update

By Shen Hong and Mike Bird 

An errant comment from a London-based economist at UBS Group AG has sparked furor among Chinese securities professionals, even after the economist apologized and said he didn't intend to offend anyone with his remarks.

Paul Donovan, chief economist at UBS Global Wealth Management, in a podcast earlier this week discussed rising consumer prices in China and attributed part of the increase to sick pigs, referring to the impact of African swine fever on pork prices in the country.

"Does this matter? It matters if you are a Chinese pig. It matters if you like eating pork in China. It does not really matter to the rest of the world," he said in the podcast, adding that China doesn't export a lot of food it produces. The comments were also in an emailed summary of Mr. Donovan's podcast that was sent to media outlets and UBS clients on Wednesday.

While pork is widely consumed in China, calling someone "a pig" in the country is derogatory because it connotes laziness and stupidity.

UBS and Mr. Donovan issued an apology for his comments the following day and said the podcast had been removed from circulation. "I apologize unreservedly for any misunderstanding caused by my innocently intended comments," Mr. Donovan said on Thursday, adding that he made the remarks in the context of pork-price inflation.

An open letter dated Thursday from the Chinese Securities Association of Hong Kong to UBS's board of directors called on the firm to terminate Mr. Donovan. It also demanded a public apology and a pledge that similar events wouldn't happen again. The group's president is Lin Yong, chief executive of Haitong International, and it represents branches of Chinese securities firms in Hong Kong.

On Thursday night, Lu Ying, a Shanghai-based director of research at Haitong Securities, China's third-largest brokerage by assets, said in a post on Chinese social media WeChat that the firm's international arm has stopped "all cooperation with UBS" as a result of the comment. She also recommended that others boycott the institution.

"Action speaks louder than words," Ms. Lu said in the post. By late morning Friday, the post had been deleted, according to a person close to Ms. Lu. Ms. Lu couldn't be reached for comment.

A Haitong International spokeswoman on Friday confirmed that the firm has "suspended all activities with UBS."

It is unclear how much business Haitong does with UBS. According to the Chinese firm's banking website, Haitong's investment-banking arm was a financial adviser to UBS Global Asset Management on an acquisition of an energy distributor in Portugal earlier this year.

A UBS spokesman declined to comment on Haitong.

Mr. Donovan's comment also sparked a debate between Chinese financial professionals on Twitter, over whether the phrasing should be construed as racist.

"Almost everyone I know who has read this comment is offended," wrote Hao Hong, head of research at Bocom International, a subsidiary of Bank of Communications Co., one of China's largest banks.

On Friday, the Securities Association of China released a statement criticizing UBS and Mr. Donovan, calling him an "unwelcome person." It advised its members -- which include hundreds of Chinese securities firms -- not to cite his opinions or invite him to their events.

The group also released a new apology letter from UBS dated Friday. In it, the bank said it was "deeply sorry" about the remarks and that it didn't intend to offend Chinese people. UBS also said it will take steps to educate and train its staff on issues of sensitivity to other cultures, and review reports more closely before they are published.

UBS last year was the first foreign bank to get approval from regulators in China to become the majority owner of a domestic securities firm. The Swiss bank has since upped its stake in its Beijing-based UBS Securities Co. joint venture to 51% and has been adding staff to the business, which is licensed to handle stock and debt offerings and provide asset management, trading, research and other services in the country.

--Zhou Wei in Shanghai contributed to this article.

Write to Shen Hong at [e-mail] and Mike Bird at [e-mail]

(END) Dow Jones Newswires

June 14, 2019 09:10 ET (13:10 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.