LAST month, the stock market rally was fuelled by a belief that there would be a V-shaped economic recovery in the region, after Singapore and then China posted better-than-expected second quarter GDP data.
By yesterday, these hopes had largely dissipated, as worries broke afresh over the pace of recovery in the United States, the world’s biggest economy.
What makes regional markets so unpredictable is the enormous amounts of "hot money" sloshing around the region.
Some of this money comes from investors who have been sitting on the sidelines and now want to catch whatever is left of the stock market rally.
But most of it is probably money borrowed by traders with access to the cheap funding provided by the US Federal Reserve which is fighting off a possible bout of deflation as US consumers tighten their belts and spend less.
This is the new carry-trade with one key difference. When fund managers borrowed in Japanese yen 10 years ago to make big bets here, they also had to reckon with a possible foreign exchange loss if the yen appreciated against the greenback.
But as they now borrow in US dollar, all they have to worry about is the currency of the equities markets they are betting on.
Unlike the long-term funds I regularly track which give an indication of how pension funds and other long-term investors view investments here, this money can suddenly turn up at our door-step, and just as suddenly slither away, at the first signs of trouble.
They had probably arrived last month to take part in the party hosted by China whose loose monetary policies had led to mainland banks extending a staggering US$1 trillion worth of loans in the first six months of this year.
It is not surprising that in their rush to ride on this latest mainland carnival, they snapped up every regional blue-chip in sight, in the naïve belief that every firm with a China exposure would benefit from the large handouts given by the mainland banks.
Some market watchers even wonder if these newbie investors, sitting in their swanky offices in London and New York, even know where to place Hong Kong and Singapore on the world map in the first place.
I have a similar experience myself recently. I went to see a Western executive who had been recently been appointed to the top post of one of the listed blue-chip firms here.
He has never worked in Asia before, but he is keen to give it a shot, as this is the region which he fervently believes to be the engine of growth in the next 10 years.
We started discussing Hong Kong, a rival market. To my surprise, he asked his minders if Hong Kong was to the north of Singapore. It would be interesting to watch how his firm copes, as he learns the ropes of his job.
Most of these investors probably treat Asia and China as the same market and invest in a similar manner. But Singapore is quite different from Hong Kong which is itself very different from Shanghai.
We can expect even more wild price swings, as these investors navigate through the region. With their billions, they can move markets but thanks to their relative ignorance, it is going to be difficult to predict what they are going to do.