Plexus Wealth Watch – 31 August 2015
During the second half of August, global investment markets displayed high levels of volatility and some significant capital paper losses were incurred.
The precise reason for this volatility is often very hard to identify, but many market commentators have pinned the blame on the Peoples Bank of China, who devalued the Chinese currency twice in quick succession in response to a sharply slowing Chinese economy. This action gave investors an inside track into the mind space of Chinese policymakers and their proximate concerns over the magnitude of the economic challenges facing the worlds’ second largest economy. Chinese equity markets were savaged and other emerging and developed markets (including South Africa) sold off sharply as a result.
In addition to global equity and property markets losing significant value, the currencies of most leading emerging market countries have also been hammered in favour of the so called hard currencies (US$, British pound and the euro).