China’s Instability

ChinaChina’s economy is struggling. The devaluation of 2 percent last month added fuel to this fire, almost drowning growth strategies. Next could be a currency war. Concerns about China are also leading to worries about international growth, a commodity price collapse and the timing of an increase in US interest rates.

And let’s not forget that we’ve been there before. Memories are still ripe over the Asian crisis back in 1997/98.

But are things really all that bad?

Apparently not, according to Goldman Sachs that conducted a study analyzing various macro factors such as: banking reserves, equity valuations, foreign exchange reserves and sovereign debt.

According to Goldman Sachs, however, China’s market is one of the safest in Asia. Rather, Malaysia and Thailand are not doing well. It suggests that the “China drama” is just that – drama – and that really while there is definitely cause for concern (volatile stock market there, devaluation of the yuan etc.), there is still room for hope for China’s market.

Still, irrespective of the study, there is a lot of talk about China’s market slump which does have to be addressed.