Global markets at the beginning of a crisis – George Soros

The world is now in a deflationary situation and developing countries that benefited from the commodity boom, the 85-year-old business magnate and philanthropist said while addressing the Sri Lanka Economic Forum here.

Legendary fund manager George Soros has said that global markets face a melting pot of risks, and the environment is eerily similar to that of the financial crisis in 2008. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008.”Soros said developing countries would have to make “harsh choices” as funds are no longer flowing into those nations”.

A falling Chinese currency is de-stabilizing the world, and the country is trying to transfer its problems to the rest of the world, where the makings of a crisis is seen, investor George Soros said.

Soros and others worry that the problems overseas will eventually wash ashore, roiling US markets.

Soros started his career in 1950s and came to be recognised for his investing prowess in 1992 when he netted US$1 billion (AU$1.42 billion) by speculating that United Kingdom would be compelled to devaluate the pound. A World Bank report has highlighted weaknesses in the Chinese economy as the currency slid to its weakest since 2011.

However, on Thursday China ditched the new mechanism, after it was triggered for the second time in a row following the shortest trading session in history when the market plummeted another 7%.

The selling began in China, where stocks plunged 7 per cent after the central bank cut the yuan’s reference rate by the most since August. The DAX was down 2.6 per cent at 9953.33 at about 4.15pm in Frankfurt.