Often, in the stock market, when one country does something volatile, it’s felt around the world.
A spokesperson for Capital Group, Timothy Armour, gave his viewpoint about China’s actions. Considering the six-year bull run America has been on, it’s sparked rising markets in other parts of the world. Every time there’s a market shift doesn’t mean that things are going badly.
What’s really happening most of the time is the market correcting itself. Every time the economy dips below a certain point, the economy adjusts to adapt to the current situation. So when the economy goes back on the rise, the markets make another adjustment, seeming to cause market volatility. Timothy Armour later went on to assure people that periodical market correction is healthy.
Tim also believes that the U.S. economy is not growing as strongly as it could be. Tim hopes that Federal Reserve will start raising the U.S. interest rate soon. Although it may not sound like a good thing, raising the interest rates now actually has long-term benefits. When the interest rates are low, investors tend to take undue risks with no high returns. Higher interest rates direct capital flows to areas where returns are lacking.
Despite what many might think about China’s recent decisions, Tim believes that its actions are just part of an economy transition. China, which was primarily a closed, investment-led economy, is now becoming an open, consumer-lead economy. Before, it was very difficult for individuals to partake in many of China’s investment opportunities.
Since an entire country is changing its economy stance, turbulence is to be expected. Switching from a closed market to an open market will take a lot of time. It’s a very rocky process.
Learn more about Tim Armour on Angel.co.