MEXICO CITY, MEXICO –Foreign exchange specialist Pablo Soria de Lachica warns that the present market developments in China will create waves throughout the global marketplace. “Investors should be aware of the potential impacts on international markets and economic movements when making investment decisions, particularly regarding emerging markets, commodities, and even the US stock market,” the financial expert cautions.
As the Director of Business Development at the Panama-based currency-trading firm, Kartoshka, Pablo Soria de Lachica is constantly examining the dynamic interplay of the global capital markets. While he does concede that it is still too soon to forecast how much the unfolding economic reality in China will impact the rest of the world, he asserts that the coming wave from China should not be ignored: “There is some chatter that China isn’t going to be a big problem – the size of China’s markets is relatively small, so why worry, right? It is true, China’s stock market accounts for a mere 7 percent of the global total, but the effect that the recent rapid downturn may have on the Chinese economy could ripple through the markets, causing serious damage.”
China’s economy is the largest in the world. After years of rapid growth from 2010 to early 2014, the economy has been steadily losing steam. The Asian nation is still a force to be reckoned with, but national economic concerns such as slowing factory production, capital outflows, and property market slumps are giving the Chinese central bank a run for its money. To complicate matters, the Chinese stock market has been on a raging ride over the past year. It skyrocketed for months, attracting millions of new and inexperienced investors, mostly from China. After a very bubbly high this summer, the Chinese stock market has been experiencing a very steep downturn. “It’s not just the fact that the stock market is sinking that is alarming to the global investors and financial experts, it is the reaction of Chinese regulators and the Central Bank. They have been propping up the falling prices and pumping cash into the economy to soften the fall – what happens when they stop?” informs Pablo Soria.
The fear is that the fallout to Chinese investors from the stock market plunge will further contract the already slowing economy. This could impact the global economy, which is still reeling from the economic crisis, and more recently the Greek debt crisis. With a decelerating China, the demand for commodities may decrease even more, pushing down prices, demand for luxury goods may decrease, and investors involved in emerging market funds may see more volatility than they bargained for. As capital leaves China and heads to the more stable USA, strengthening the dollar, American industries that conduct a lot of business abroad, including the major three – tech, health care, and the automobile industries, could see sliding profits. Pablo Soria de Lachica cautions investors to be aware of this oncoming wave and consider it in their financial decisions.
Pablo Soria de Lachica is one of the world’s leading experts on foreign exchange transactions. He seeks to not only advise his clients on how to best navigate the complex system of global capital markets, but also to educate them. He graduated from the Universidad Tecnologico de Mexico with a Master’s degree in Business Administration. Presently he is a highly sought-after broker and Director of Business Development at Kartoshka, an international currency-trading firm based in Panama City.