Billionaire investor George Soros has warned other investors according to Bloomberg.com to be very cautious as he believes the global markets are facing a very serious crisis.
While speaking at an economic forum in Sri Lanka, Soros made mention of the fact China is still struggling to come up with a suitable growth model. He also spoke on China’s currency devaluation and how its causing problems for the entire world.
According to Soros, the things going on in the market right now are very similar to what took place in 2008.
During the first week of 2016, stock and commodity markets as well as global currency markets were all under fire. While China is in the process of shifting from investment and manufacturing towards consumption and services, a sinking Yuan is causing even more concern as investors are unsure about the strength of the Chinese economy.
Within the first 10 days of 2016, over $2 trillion was wiped from the value of global equities. If that’s not enough to make you rethink investing in China, than what is?
George Soros was quoted as saying, “China has a major adjustment problem.” A problem so severe it amounts to a crisis in the eyes of Soros.
This is not the first time George Soros has warned of a 2008-like catastrophe. In 2011 he said the Greece-born European debt crunch was even worse than the financial crisis that took place in 2008.
According to the Bloomberg Billionaires Index, Soros has a net worth of just over $27 billion. His career began in the financial capital of the world, also known as New York City, in the 1950’s.
In 1992 he netted $1 billion when he correctly predicted the U.K. would have to devalue the pound. This one move gained him a reputation for being a very savvy investor. That’s why when he predicts a crisis is coming, investors stop and listen.
To help with China’s adjustment problem, the Communist Party promised to do two very important things. First they will increase the convertibility of the Yuan by 2020, and secondly they will slowly but surely dismantle capital controls. And while this may not solve the problem completely, it is a step in the right direction.
Read more: http://www.forbes.com/profile/george-soros/