Billionaire George Soros believes the global markets are facing a series crisis and he has warned investors to be very cautious. He likened the crisis to what went on in 2008. In an article posted on Bloomberg.com, Soros expressed great concern over China’s inability to come up with a new growth model. He also discussed currency devaluation and how its causing problems all over the world.
During the first week of 2016 on http://www.biography.com/people/george-soros-20926527 three very important sectors of the financial markets were under fire. They were the commodity markets, stocks and global currency. Add that to a sinking Yuan and you see why there is so much concern over the strength of the Chinese economy. But that wasn’t the only bad news that came out within the first few days of the year.
On top of the financial markets being under fire, global equities lost close to $3 trillion within a matter of days.
According to George Soros, “China has a major adjustment problem”. The challenges they are currently facing reminds him of the very same challenges that resulted in the financial crisis of 2008.
The interesting thing is this isn’t the first time Soros has warned of such a crisis. In 2011, while serving on a panel in Washington, George Soros said he believed the debt crunch going on in Europe was far more severe than the crisis that took place in 2008.
In the first week of January 2016 volatility had soared quite a bit. The Chicago Board Options Exchange Volatility Index on http://www.investopedia.com/university/greatest/georgesoros.asp, commonly referred to as the fear gauge, was up by a whopping 13 percent. The Nikkei Stock Average Volatility Index, which is responsible for measuring the cost of protection on Japanese shares, was up by 43 percent in just the first week of the year.
The Merrill Lynch index also showed the price of Treasury bonds was up by close to 6 percent. In an effort to make things better, the Communist Party in China has pledged to increase the convertibility of the Yuan by 2020. They have also promised to dismantle capital controls over the course of a certain period of time.
While the manufacturing sector is still a bit sluggish, economists are hopeful that things will get better in the future.
George Soros currently has a net worth of just under $27 billion and is considered one of the most successful investors in the world. Between 1969 and 2011 his hedge fund averaged a net gain of about 20 percent per year. He began his career in the 1950’s and quickly gained a reputation for being a very astute investor. Learn more about his profile at forbes.com
These days he spends a lot of his time writing and giving back through his charitable foundation network known as Open Society Foundations. To learn more about Soros and the amazing work he does visit his website at www.GeorgeSoros.com.