KUALA LUMPUR, Jan 7 (Bernama) -- Bursa Malaysia’s benchmark index rebounded from earlier losses to close at its intraday high on Wednesday, gaining 0.27 per cent in late trading as buying interest returned to selected heavyweights. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) advanced 4.48 points to 1,676.83 from Tuesday’s close of 1,672.35. The benchmark index opened 0.88 of-a-point lower at 1,671.47 and subsequently hit a low of 1,665.94 during the mid-morning session before gaining momentum toward closing. On the broader market, losers led gainers by 565 to 512, while some 526 counters were unchanged, 1,046 untraded, and 10 suspended. Turnover improved to 2.73 billion units worth RM2.76 billion versus Tuesday’s 2.66 billion units worth RM2.76 billion. Dealers said that investors were cautious following geopolitical developments in Asia.
Is the financial world finally recuperating? Although there are statistics and incidents in shreds and patches that indicate that the financial world is settling down but a particular change has to last for a considerable time period before it establishes itself as a trend. What gave rise to the turmoil in the financial markets? The factors that are responsible for creating upheavals in the economy didn’t impact the economy in one day; it started seeping into the economy few years ago. Since the economy wasn’t strong enough to withstand the turmoil, it gave in. However, the economy was seemingly healthy. But this wasn’t the true picture.
It started with subprime lending activities that assumed an uncontrollable proportion due to manipulation and irregularities. Mortgage brokers and lenders had scrupulously inflated income levels and manipulated appraisals. They approved mortgage loans of borrowers that were not eligible to get a mortgage.
As more and more borrowers started defaulting on their mortgages, the number of foreclosures increased and so did bankruptcies. There was a credit crunch and consumers received a bolt from the blue with the turn of the economy. The recession affected consumer spending, investor sentiment etc.
As credit crunch assumed a horrendous proportion, it became difficult for consumers to make ends meet. Business houses closed down or declared bankruptcy. Employers went on a cost cutting spree and nothing seemed to be working well for the economy. Credit card issuers altered their payment policies and reduced credit limits. But the same was not communicated to the consumers. So, the credit cardholders started defaulting on their credit card payments too. All this added to the increase in delinquencies (mortgage as well as credit cards).
The financial world as a whole was affected. The financial stalemate that started in United States sent ripples to all the major economies of the world. It affected all the sectors of the economy since it affected all the macroeconomic indicators drastically.
However, the economy is slowly looking up and according to experts, it will take another year or 2 for the economy to recover if not completely at least partially.
It started with subprime lending activities that assumed an uncontrollable proportion due to manipulation and irregularities. Mortgage brokers and lenders had scrupulously inflated income levels and manipulated appraisals. They approved mortgage loans of borrowers that were not eligible to get a mortgage.
As more and more borrowers started defaulting on their mortgages, the number of foreclosures increased and so did bankruptcies. There was a credit crunch and consumers received a bolt from the blue with the turn of the economy. The recession affected consumer spending, investor sentiment etc.
As credit crunch assumed a horrendous proportion, it became difficult for consumers to make ends meet. Business houses closed down or declared bankruptcy. Employers went on a cost cutting spree and nothing seemed to be working well for the economy. Credit card issuers altered their payment policies and reduced credit limits. But the same was not communicated to the consumers. So, the credit cardholders started defaulting on their credit card payments too. All this added to the increase in delinquencies (mortgage as well as credit cards).
The financial world as a whole was affected. The financial stalemate that started in United States sent ripples to all the major economies of the world. It affected all the sectors of the economy since it affected all the macroeconomic indicators drastically.
However, the economy is slowly looking up and according to experts, it will take another year or 2 for the economy to recover if not completely at least partially.
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