Friday, July 5, 2013


When shares price substantially drop, is it yours problem? This morning my friend claimed that  although market drop heavily but does not his problems. That surface information tell that is true because his is not even enter into market and buy. So his money still belonging to him.

Actually, the facts are not really as his thought. Because, if you standing up at atmosphere and enjoying the freedom from free trading. You and me indirectly step onto market. So, the heavy adjustment bring bad effects onto economic fundamental as well as it also could spoilt all the base of economic.

If you are really understand the capital market or free market theory as well as also got some little bit knowledge of macroeconomic. The circle of economic growing up because of capital market growing up consistently otherwise the impact to ordinary people must be big and make them poor than before unless the country adopting the Communism Policy.

Like us take a simple case to study, if insurance listed company shares price drop. The confident on such company also reduce, then it can't raise funds to pay policy owner or finance the funds by way of paying higher interest rate to refund borrower. The said insurance may face difficult payment, unfortunately you are one of the policy owner and during same period the insurance face difficult to continues the business. Your benefit on the such policy will be devalue.

Like above case, my friend never step in buy the insurance company shares but indirectly his coverage of policy become void or cannot get refund the benefit immediately. so, the shares price drop is concern him also.

If he think that is not serious enough, you can imagine if one of the bank cannot raise funds to meet his capital requirement because of the shares price drop heavily. What will happen if you are the customer of this bank and deposit a lot of money on it.????

1 comment:

Unknown said...

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