Friday, January 08, 2016
SHANGHAI, China… People walk along a pedestrian bridge with a screen showing stock market movements in Shanghai yesterday. C
Global financial markets are off to a rocky start this year, with the Chinese stock market being halted as it hit its circuit breaker down limit of seven per cent twice in less than a week, with the second halt happening in only 29 minutes. Virtually all major global markets have taken their cue from China, including the mighty US, with substantial falls in the first four days of trading this year.
Hedge fund guru investor George Soros, “the man who broke the Bank of England”, has also said that China had a “major adjustment problem” on its hands. “I would say it amounts to a crisis,” he told an economic forum in Sri Lanka, according to Bloomberg News. “When I look at the financial markets, there is a serious challenge which reminds me of the crisis we had in 2008.”
Despite all this global turbulence, the Jamaican stock market, which doubled last year, has continued to rise in the first four days of trading, maintaining its performance as the world’s leading stock market. The key questions are will this continue, and how will the Jamaican economy perform generally this year in what appears to be an even riskier global environment.
A useful starting point is to review what I said last year, and whether it came to pass. At the beginning of last year, in the article “Projections for the Jamaican economy in 2015”, I noted that the most important positive development for Jamaica was low oil prices, arguing that “low oil prices are likely to be sustained in 2015, and could even fall further”. They were then around US$55 per barrel.
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