The Chinese economic shift has got the world scared. China has the second largest economy in the world, and the major economic shifts that it is currently undergoing are having a major impact on the global economy. George Soros, a hedge fund genius who made his name with accurate predictions says that the world economic situation is similar to what we say in 2008. George Soros is not the only one who says there is a need for extreme caution. Three major volatility measures, the VIX, also known as the ‘fear gauge’, the Japanese shares measure the Nikkei Stock Average Volatility Index on opensocietyfoundatons.org, and a Merrill Lynch Treasury bonds index are all way up over last year, 13,43, and 5.7 percent respectively.
Why the major fall out? China has a large and powerful economy on Bloomberg and the world has generally trusted them as managers of money. But. now that the giant is venturing into uncharted waters, the world is uncertain if it will sink or swim and can only watch with bated breath a they flail and kick to keep themselves afloat. While authorities throw hundreds of billion of dollars into the market, the People’s bank of China does its part by slashing interest rates to unprecedented lows, and the Communist Party pledges to do all it can to increase the yuan’s value and convertibility rate over the next four years.
George Soros says that it has been and will be difficult to get those interest rates back to a positive level and that the economic situation in China amounts to a crisis. George Soros urges investors to take extreme caution as the patterns, in his opinion and apparently that of the world’s, hark back to the 2008 deep recessions that the world still has not quite recovered from. Already, at least once by the first week of January this year, China’s stock market has shut down from loss and the world has lost $2.5 trillion in equities.
Billionaire George Soros issued a financial warning to all investors to be cautious in this delicate market. China is struggling to find a new plan for growth, their currency is losing value, and the US recently upped the interest rates, all these things combined can cause global market problems.
The new year kicked off with a slow market that took a sharp downturn that resulted in nearly $2.5 trillion being wiped off the global equities board. Though China is trying to adjust to the problem, it’s creating a crisis that is reminiscent of the challenges faced during the 2008 global financial crisis. Evidence to back his claims comes with the measure of volatility that is surging this year. The Chicago Board Options Exchange Volatility Index gauges the fear in the market, and so far that is up 13%. The Nikkei Stock Average Volatility Index gauges the cost of protection on Japanese shares have reported a 43% climb for 2016. In response, China has pledged to heighten the yuan’s value by the year 2020 and to ease into a slow dismantle of capital controls. Information originally sourced from Bloomberg
Soros opinion carries heavy weight, his hedge fund management company, Soros Fund Management, gained an average of nearly 20% per year between 1969 through 2011. As a refugee who fled Budapest during the Nazi occupation of WWII, Soros graduated the London School of Economics then settled in the United States where he built a successful company and amassed an amazing fortune.
Soros is a strong supporter of human rights and open societies and through his Open Society Foundation he has helped numerous students in South Africa attend Cape Town University. His foundation has collected over $835 million to aid with their goals. Soros is also the author a numerous books, as well as highly publicized essays that cover topics like politics, economics, and society.
Sourced from George Soros