Wednesday, September 2, 2009

A new wave of financial crisis could hit the US

Companies pay the cost of their misdoings, and so do their shareholders. Who else can vouch for the fact than the investors in US financial stocks, who have had a pretty rough ride over the past two years. As today's chart shows,investors in financial behemoths like Citigroup, AIG and Bank of America saw their investments disappear in these companies during the period September 2007 till about the beginning of 2009. While these stocks have recovered, the current value is far below what it was in September 2007. For instance, Citi's stock price is currently just around 10% of its September 2007 levels!

Rs 100 invested in Sep-07 (pre-crisis) is now...
Source: Yahoo finance, CMIE Prowess

As compared to these American financial companies, investors in Indian financial stocks have had a much better time during the same period. While investors in ICICI Bank had to pay for the bank's aggressiveness, those in more conservative companies like HDFC Bank and SBI have nearly recouped most of their losses. Doesn't this tell you something?

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