Currents of Currency Message Board

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Strategies & Market Trends : Currents of Currency

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From: Ahda	8/18/2015 12:00:41 PM
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August 18, 2015 — 5:37 AM PDT The wealthiest investors in China’s equity market are heading for the exits. The number of traders with more than 10 million yuan ($1.6 million) of shares in their accounts shrank by 28 percent in July, even as those with less than 100,000 yuan rose by 8 percent, according to the nation’s clearing agency. While some of the drop is explained by falling market values, CLSA Ltd. says China’s rich have taken advantage of state buying to cash out after the nation’s record-long bull market peaked in June http://www.bloomberg.com/news/articles/2015-08-18/china-s-richest-traders-are-fleeing-stocks-as-the-masses-pile-in You have a stock market loss and a Yuan loss of around 4% . China gov attempts to prop the market any way they can as we also have done with our market be it a bit differently. I truly do not know if attempting to maintain an asset value that the free market (price people determine as fair ) can be eroded by means of a prop which distorts value and can add to very unhealthy inflation situation. The exaggeration of asset value can lead to an actual reduction of currency value. Assuming an eggs market value remained stationary (no shortage of hens or food for them) if the price of an egg was $1 in the morning and $10 in the afternoon the only thing that increased was numerical currency. Asset is still the egg but currency had ballooned and no longer represented what people could afford to pay for the egg. The egg because of free market value can return to a fair price but the additional currency goes on to exaggerate value somewhere else so you have unhealthy inflation. Perhaps China dropped Yuan value in an attempt to stymie the possibility of unhealthy inflation as well as increase world sales appeal for her products. Long range I feel it is best not to tinker with asset value as to me it increases the possibility of a have and have not society. Ideally you want a strong currency not a weak one.

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