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HK gives finger to Soros

In China, Hong Kong on 26/04/2016 at 11:00 am

NYT Dealbook

Stocks have been surging since February, helped by promising corporate earnings in the United States, the recovery of oil prices and indications of restraint on interest rate increases from the Federal Reserve.

There may be question marks over many parts of Hong Kong’s economy, but stocks there seemed to have shrugged all that off. The Hang Seng index rose 1.8 percent on Thursday, while the MSCI Hong Kong Index closed at its highest point since Nov. 24. Optimists say concerns over monetary tightening from the Federal Reserve and the weakening renminbi have eased, and the shares are too cheap to pass up, Bloomberg News reports.

But George Soros is warning markets that China’s financial system is at risk and the rise in credit will be the downfall for world’s second biggest economy.

Speaking at an Asia Society event in New York on Wednesday, Soros said the similarities between the credit markets in China “eerily resemble” to those of the United States in 2007 before the financial crisis.

Recent stimulus packages in China have seen sharp rises in asset prices – namely in the housing and construction sector, but Soros believes these have been fueled by excessive lending to underperforming industries.

“Most of the money that banks are supplying [in China] is needed to keep bad debts and loss-making enterprises alive,” Soros said.

Read more: George Soros Worried about China’s Financial System | Investopedia http://www.investopedia.com/articles/investing/042116/george-soros-worried-about-chinas-financial-system.asp#ixzz46i1T5WmU
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