Ouch!

It was not a pretty sight this last one week. The stock markets have taken a beating, especially in Asia. This is all caused by a fear of a credit crunch as a result of losses suffered by major financial institutions all over the world by investing in the US subprime market - mortgage lenders, hedge funds, mutual funds, even banks were not unscathed. As of yesterday, our KLCI composite index closed at 1191.50, regaining much ground from an intra-day low of 1143.90 after much panic-selling in the early afternoon trading.

In early July, Bear Stearns announced losses suffered by two of its hedge funds investing in subprime loans; followed lately by BNP Paribas and another fund in Australia - it has grown from a local problem in the US into a worldwide one. The problem is no one knows how deeply entrenched are the losses as the subprime loans have been themselves repackaged into different investment grade bonds/money market instruments. Such is the nebulousness of the financial markets these days.

A lot of investors got burnt this time around. The last time, the markets rebounded quickly and surged on. Will lightning strike twice in the stock market? Everyone is keeping their fingers crossed...