The world's most famous speculator once again has his say on international markets, warning investors of the dangers deriving from China's difficulties.
During a conference held in Sri Lanka, George Soros left no room for optimism, comparing the vicissitudes of the Chinese markets to “crisis we had in 2008”.
As in September 2011, when he spoke of the economic crisis in the Eurozone, or in 1992 when he helped bring the Lira to the brink by attacking the Italian currency, his words quickly went around the world, emphasizing the climate of alarm aroused by the huge volatility of the Stock Exchanges at the beginning of the year.
As reported by the Sunday Times, one of Sri Lanka's leading newspapers, Soros said that China's economic model change is proving particularly difficult to implement. In addition, the competitive devaluation maneuvers currently underway, according to Soros, is infecting the rest of the world with its problems.
As for the return to positive interest rates, the Hungarian-born financier suggests investors to maintain a very cautious attitude, while the planet's markets face a new crisis.
However, the words spoken by Soros are in stark contrast to the forecasts of the main investment banks from all over the world, who on the contrary are betting precisely on China, seeing in the prices of Beijing's shares a very interesting investment opportunity, also because it must be remembered that as of today there is a ban for large shareholders to sell securities in their portfolio beyond 1% overall in the next three months.
Goldman Sachs also points out that, in the first six months of the current year, the connection between the Hong Kong and Shenzhen stock exchanges will become operational, following the one already activated between Shanghai and Hong Kong. The strong anti-corruption campaign launched by the Government of Beijing and the possibility that type A shares will be included in the MSCI indices represent another interesting opportunity that should not be underestimated.
But there's more, because according to the analysts of the main financial institutions (Nomura, Ubs, Natixis, Syz Asset Management), the Chinese market could become a real opportunity especially in sectors related to quality goods and services supported by government investment. We recall that the services sector accounts for 51,4% of the country's GDP compared to 49,1% a year ago and represents, among other things, the only growing indicator in 2015.
Although the word prudence is a must today when one thinks of investing in Asian markets, the prospects outlined by the Ukrainian tycoon could be a little too pessimistic and above all could be the result of a well-defined speculative strategy. After all, it wouldn't be the first time that Soros has bet against a country in order to expand his immense fortune. And Italy knows something about it.
