Abstract Soros, who directed the Asian financial crisis in 1998, is coming again. Investment tycoon Soros said bluntly at the Davos Forum on January 21st: the world is facing deflationary pressures, which makes him bearish on the US stock market. He said he shorted the S&P 500 index. This year, the S&P 500 means...
Soros, who directed the Asian financial crisis of 1998, is coming again. Investment tycoon Soros said bluntly at the Davos Forum on January 21st: the world is facing deflationary pressures, which makes him bearish on the US stock market. He said he shorted the S&P 500 index. This year, the S&P 500 index has fallen 8.5%. Soros said it is still too early to buy stocks.
In addition to shorting US stocks, Soros bought US Treasury bonds at the end of last year, shorting the stock market of raw material producers, and betting that Asian currencies will fall against the US dollar.
Soros expects a hard landing in the Chinese economy, which will lead to a further increase in the global deflation crisis.
He said at the Davos forum that a hard landing in the Chinese economy is almost inevitable. This is not the result he expected, but the conclusion drawn through observation. However, he also said that China can handle the hard landing problem because China has $3 trillion in foreign exchange reserves and a more liberal policy.
Soros also pointed out that the slowdown in China caused by excessive debt will also aggravate problems in other parts of the world. As China's economic slowdown leads to a decline in crude oil and raw material prices, China will become the most fundamental cause of global deflation.
At the Sri Lanka Economic Forum on January 11 this year, Soros said that today's global economic and financial conditions are a repetition of the conditions that triggered the 2008 global financial crisis.
Soros said: "China has a huge adjustment problem. It can be said that this adjustment problem is equivalent to a crisis. When I look at China's financial market, it reminds me of the financial crisis we encountered in 2008, and In my guidance to investors, I told them to be very cautious."
Related reading: Chinese official media responded to Soros China's sharp warning will be severely punished!
Soros, a Wall Street investment predator, once shorted the pound, helped in the 1997 Asian financial crisis, and short-selling the currencies of Southeast Asia, causing multinational currency crashes. Although the influence of the great god on Wall Street has been greatly reduced in recent years, his name in China is still very good. Although he has already announced his retirement, he is actually retiring. At the Winter Davos Forum, he said that a hard landing in the Chinese economy is almost inevitable, and that this is not the result he expected, but the conclusion drawn through observation. Of course, in order to avoid damage to his reputation, he also said a living saying that China can handle the hard landing problem because China has $3 trillion in foreign exchange reserves and a more liberal policy.
How much does Soros have an understanding of the Chinese economy? What is the credibility of the Chinese economy’s hard landing? Is the so-called judgment judged objectively or is it produced by other public opinion? Let us analyze it.
Does Soros really understand the Chinese economy?
At the Davos Forum, Soros pointed out that the slowdown in China caused by excessive debt will also aggravate problems in other parts of the world. As China's economic slowdown leads to a decline in crude oil and raw material prices, China will become the most fundamental cause of global deflation.
The Chinese economic problems discussed by Soros are obviously lacking in depth and wrong. Is China’s economic slowdown caused by excessive debt? Not at all. The Chinese government's debt ratio is one of the lowest in the world, which is much better than in the developed countries led by the United States. Moreover, compared with almost no state-owned assets in developed countries, China's state-owned enterprises and governments have a large amount of assets, and there is no risk of repayment at all. China also has the world's highest savings rate of more than 50%, which is enough to ensure that China's economy will not affect growth due to debt problems.
Of course, although the debt ratio of the Chinese government is not high, the debt ratio of enterprises is relatively high, but is this the reason for the slowdown in China's economic growth? Obviously not, because the company’s debt ratio is also high when the growth rate is fast in the past. Why can it be high in the past when the debt ratio is high, and now the growth rate is slowing down? The root cause is not in the debt ratio, but in the growth of external demand caused by the world economic crisis, the Chinese economy is also in the process of structural transformation and industrial upgrading. Therefore, it is not surprising that the current slowdown in the growth of the Chinese economy is essentially a normal slowdown that is inevitable in the process of structural transformation and industrial upgrading. Even so, China's economic growth rate is still the world's best economic growth, and China's economic growth and vitality are still far from comparable to the developed countries led by the United States.
Is China's economic growth the most fundamental cause of global deflation? In fact, it is not at all, it can only be said to be one of the reasons. The reason is very simple. For example, in 2015, China’s crude oil imports increased by 8.8%. This growth rate is the second highest growth rate since 2010, but international crude oil prices have fallen sharply during this period. Can this be said to be Is China importing less crude oil? In fact, the fundamental reason for the sharp fall in international commodity prices is the impact of world economic growth, especially the slowdown in economic growth in developed countries, the appreciation of the US dollar, and the expansion of international commodity production. China’s economic slowdown is only one of the factors. a part of. It is obviously biased to attribute the so-called future global deflationary pressure to China.
Obviously, it can be seen from the series of remarks made by Soros on the Chinese economy that the investment predator has a lack of understanding of the Chinese economy, or has a purpose, or both. However, no matter which one, it is not a compliment to the point of view itself.
An investment crocodile with a wide range of verbal loopholes in the Chinese economy "sings the Chinese economy" at the most famous economic forum in the world, saying that the Chinese economy will land hard. In the view of Zhan Hao, on the one hand, he can be sure that he has ulterior motives. On the other hand, his claim is unfounded and there is no credibility. The Chinese economy will not make a hard landing. However, since Soros said, why does he say that the Chinese economy will land hard? What is hidden behind this?
Why does Soros say that the Chinese economy will land hard?
In fact, Soros said that the hard landing of China's economy is not the first time. As early as April 2013, he accepted an interview with the Chinese media and said: The transition is very difficult, and the overall growth rate of the Chinese economy will definitely drop sharply. "It has actually happened. Two years and nine months after his interview, the hard landing of China’s economy changed from “already happening†to “will happen†in his mouth. This reversible expression makes people feel that there is a feeling of crossing. .
In fact, the capital speculative predator who has withdrawn from the front line of Wall Street is only talking about the "public opinion offensive" created by its investment. Behind this offensive is the bad intention of taking advantage of its speculation. Of course, this investment predator is indeed a big player. He told the market directly at the Davos forum that he has shorted Asian currencies and US stocks. Of course, Soros claimed that he had been shorting US stocks for a year or two. As early as 2014, he said that he shorted US stocks. However, the situation is not as good as he imagined, because in the past year or two he has shorted the US stocks for a long time and did not make money or even lose money. It is estimated that he recently made money when the US stocks fell.
It is not known whether Soros is short of RMB or Hong Kong dollars, but it is clear that singing China is beneficial to him to further short. Because the Chinese economy has a hard landing expectation, it will not only be negative for US stocks, but also affect other Asian currencies, which is good for shorting.
Based on the above, we can know that Soros’s so-called Chinese economic hard landing argument is just a chance to make a market bearish expectation to increase its short-selling gains.
China strongly warns "Soros"
Shorting China, it depends on the Chinese government's promise not to agree. At the same time, Li Yuanchao, vice chairman of the Chinese National Committee who attended the Davos Forum, refuted the argument that Soros’s so-called Chinese economy will hit hard, saying that “China has the confidence and ability to maintain rapid economic growth.†The stock market is 'not yet mature' and the government will continue to intervene to ensure that a few speculators will not profit by sacrificing the interests of ordinary investors.†Vice Chairman Li Yuanchao also explained the RMB exchange rate issue, he said, “For foreign exchange markets, in fact, foreign exchange market fluctuations After the Fed’s interest rate hike, China’s foreign exchange market volatility is only moderate fluctuations.†Li Yuanchao said: “On the one hand, China is trying to expand the renminbi market, on the other hand, we must also ensure that the currency remains stable. Exchange rate fluctuations are caused by market forces. The Chinese government has no intention or policy to depreciate."
Obviously, the Chinese government has clearly refuted Soros’s argument and interpreted the Chinese economy, the Chinese stock market and the RMB exchange rate. However, the more severe ones are still behind. On January 23, 2016, two days after Soros’s remarks, Xinhua News Agency published an article in English commentary. Soros, who sent a short Chinese signal on January 21, wanted to go short. Chinese speculators have issued severe warnings.
Xinhua News Agency’s English commentary said: As the Chinese central bank takes measures to stabilize the RMB exchange rate, some “radical†speculators who are trying to short the RMB will suffer huge losses. Reckless speculation and malicious short selling will face higher transaction costs and may even be serious laws. As a consequence, the Chinese government is trying to improve market regulation and legal systems, and the government has sufficient resources and policy tools to ensure that the economic situation is under control and to address any external challenges.
The Xinhua News Agency’s English commentary on January 23 was clearly aimed at the hard landing of Soros’s Chinese economy two days ago and shorting Asian currencies. We all know that Xinhua News Agency is China's national society. It is the official voice that is properly spoken, and it is rare for the speculative voice to be so severe. The attitude of Xinhua News Agency shows that China is ready to fight the currency war. This kind of warning means that whoever maliciously speculates to short China, China will be "beating."
If you look carefully at the wording in the article, you will find that Xinhua News Agency is clearly telling the speculators that your opponents who speculate to short the renminbi are the People's Bank of China. Your recklessness and malice will not only face higher transaction costs, but will also take up the law. The weapon repairs malicious speculation. The meaning of these words is that if you want to compete with the People's Bank of China and you are not afraid of losing money, then you can't do it. The government can also adopt policies, laws and other means that can be used to cope with any external challenges.
In fact, this is not just to say to Soros, because behind Soros is the entire Wall Street, so this call is for all funds including Soros, trying to speculate on the renminbi, that is, if you dare to maliciously short the renminbi, China will Will unceremoniously eliminate the funds to speculate and short China!
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