KUALA LUMPUR, April 23 (Bernama) -- Bursa Malaysia closed higher today, lifted by selective buying in banking and telecommunications heavyweights amid improved sentiment following the extended ceasefire in West Asia. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 11.31 points, or 0.66 per cent, to 1,721.70 from Wednesday’s close of 1,710.39. The benchmark index opened 5.16 points higher at 1,715.55, and moved between 1,714.41 and 1,723.51 throughout the day. In the broader market, gainers outpaced losers 706 to 485, while 562 counters were unchanged, 1,018 untraded and 43 suspended. Turnover expanded to 3.48 billion units valued at RM3.10 billion from 3.19 billion units valued at RM2.69 billion on Wednesday.
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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