George Soros Sees Crisis in Global Markets That Echoes 2008

Jan 10

Week 1, 2016

This week’s ‘Investing Safely’ Newsletter starts with an important subject about the upcoming economic crisis. The world’s financial markets cycle up and down almost every 8 years, so I suggest you read this email till the end and do not make hasty decisions.
 
The well-known billionaire George Soros is predicting a crisis in the international financial markets that echoes 2008.
 
Global markets are facing a crisis and investors need to be very cautious, billionaire George Soros told an economic forum in Sri Lanka on Thursday.
 

What’s Happening in the Markets this week 

  • China Halts Stock Trading After 7% Rout Triggers Circuit Breaker – The worst-ever start to a year for Chinese shares triggered a trading halt in more than $7 trillion of equities, futures and options, putting the nation’s new market circuit breakers to the test on their first day. Trading was halted at about 1:34 p.m. local time on Monday after the CSI 300 Index dropped 7 percent.
  • Euro-Area Factories End 2015 With Strongest Growth in 20 Months – Manufacturing in the euro area accelerated at the fastest pace in 20 months in December as rising new orders propelled output. A Purchasing Managers’ Index for the industry rose to 53.2 from 52.8 in November. For the first time since April 2014, manufacturing expanded in all nations covered including Greece.

Commodities in Review

  • Oil Rises as Saudis Cut Ties With Iran After Embassy Attacked –  Futures rose as much as 3.5 percent in New York, extending Thursday’s 1.2 percent advance. Saudi Arabia and Iran are OPEC’s first- and fifth-ranked producers, respectively.
  • Gold Opens 2016 With a Rally as Saudi Tensions Fan Safe-haven Demand – Gold, traditionally seen as a store of value during political turmoil, climbed after Saudi Arabia cut ties with Iran, a day after its embassy in Tehran was attacked to protest the Saudi execution of a prominent Shiite cleric.
USA
  • Year of Twists Leaves S&P500 Investors Right Where They Started – After enduring the worst selloff in four years and volatility not seen since the financial crisis, the Standard & Poor’s 500 Index ended 2015 just fractionally below where it began, down 0.7% at 2,043.94. The decline, sealed on the last day, broke a three-year streak of annual advances that fizzled as the Federal Reserve raised interest rates, valuations jumped and commodities plunged.
UK
  • U.K. Stocks Slide on First Day of 2016 Trading Amid China Rout – U.K. stocks got no respite in the new year, after their worst annual drop since 2011, amid investor concern over a slowdown in China, the biggest consumer of commodities. The FTSE 100 Index slid 1.7% at 8:37 a.m. in London, after falling as much as 2.2%.
Europe
  • Europe Stocks Drop as Traders Return to Market Amid China Rout – In the first trading day of the year, the Stoxx Europe 600 Index lost 1.8% by 8:05 a.m. in London. The rout is coming after European shares completed a fourth straight year of advances, with the Stoxx 600 climbing 6.8% to beat global equities and the S&P 500 Index.
Asia
  • Asia Stocks Drop Most in Three Months as China Data Spur Sell-off – Asian stocks headed toward the biggest drop in three months as further signs of a slowdown in China sparked the worst start to a year for mainland equities, forcing regulators to halt trading for the rest of the day.
Emerging Markets
  • Emerging Stocks Drop as China Halts Share Trading After Plunge –Emerging-market stocks tumbled the most in four months, with a rout in mainland shares triggering a trading halt, as weak Chinese manufacturing data and escalating tension in the Middle East sparked a selloff in riskier assets.
What you need to Consider-
In the past 5 years, we have seen the global markets in a turmoil. Almost every asset class has been affected and this year is a continuation of that trend.
If you are in a regular savings plan currently 
  • Do not worry as long as you are in a global diversified investment strategy. In fact, you should be happy every time the market moves up and down.
  • The principle of dollar cost averaging is buying you more units. 
  • The worst thing you can do is switch out of funds that are not performing. This will book your notional losses. 
  • Switch out of funds that are performing better instead.

If you are in Lump Sum Investments –

  • Now is the time to move into fixed income products like the ones mentioned below.
  • If you are into funds, hold on to funds that are under-performing and switch out of funds that have performed well.

Lump Sum Product in Focus (Product ends January 20th) – 

Invest in LinkedIn, Facebook, BMW and Bayer stocks with guaranteed return of 9.2% paid quarterly in cash
  • Issuer – Societe Generale
  • Term – 3 years
  • Underlyings – Linkedin Inc, Facebook Inc, BMW Inc, and Bayer A.G.
  • Coupon guaranteed regardless of underlying performance.
  • After each 3 month period, a guaranteed coupon of 2.3% (equivalent to 9.2% per annum) is paid.
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About the Author

Amit is an Independent Financial Advisor, based in Dubai since 1997. He is part of the prestigious ‘Million Dollar Round Table’ (MDRT), which is an elite club of the best financial advisors worldwide.

He has authored the ‘6-Step Financial Success Guide’, and the book ‘Creating, Preserving, Distributing Wealth’.

He helps business owners and professionals ‘Create A Second Income’ through investments.

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