The economic and political environment then and now might be different in many respects, but there are enough similarities to send chills down the spines of some observers.

And they centre on cheap credit - its rewards and risks.

The risks are evident in the United States, where financial institutions that have lent billions of dollars to low-income borrowers and private equity firms are now facing catastrophe.

Fears over where it all might end have sent Wall Street and now markets across the world into wild swings.

But Asian investors could be forgiven for asking what this has to do with them. Surely, Asia had cleaned up its own financial act 10 years ago when it coped with the aftermath of a colossal banking crisis that sent currencies such as the Thai baht and Indonesian rupiah into a free fall.

And while other regions of the world might fret over a credit crunch, Asia is swimming in cash. China alone sits on more than US$1 trillion (S$1.51 trillion) in foreign reserves.

Asian companies are flush with cash as well. The global economic boom has propelled prices of commodities to record-high levels and driven up corporate earnings in many countries.

But older hands know that this observation might be true only up to a point.

There is concern about whether the woes afflicting financial markets will spread to the real economy in terms of making capital - the fuel for corporate growth - harder and more expensive to secure.

Growth in major economies such as the US and parts of Europe is already at a snail's pace.

Already, the prospect of dearer money has become a party pooper for regional companies planning to raise capital.

Last week, Singapore-listed palm oil company Golden Agri-Resources had to postpone a US$400 million convertible bond issue as investor appetite for risk soured.

Convertible bonds are debts sold by a company to fund managers or wealthy investors who can convert them to shares at some point in the future. This is based on the assumption that the company's share price will keep rising and prompt the investor to opt for shares, rather than cash, as repayment for the initial loan.

But if investors reckon the market will fall, they will not come to the party and that is the fear now.

There has certainly been a party with South-east Asia kicking up its heels, just as it was in pre-crash 1997, with many investment banks adding to the mood by declaring that 'this time, it's different'.

Stock markets across the region from Mumbai to Shanghai are racing each other to record finishes, as foreign fund managers rain down cash in the hunt for alpha returns in Asia's high-octane growth economies.

Until the recent correction, the benchmark Straits Times Index had risen 23 per cent to hit a record high of 3,665.13, while the UOB Sesdaq Index, which tracks penny stocks, gained an eye-popping 111 per cent to reach an all-time high of 302.64.

And companies raising cash for business expansion have not had it this good in more than a decade.

The Financial Times reported that, in the first six months of the year, Singapore companies raised US$5 billion by issuing new shares, while mergers and acquisitions hit US$25 billion.

And there has been an air of confidence and growing prosperity as people gather at hawker centres to discuss rising property prices and blockbuster collective sales.

This scene in Singapore is mirrored across the region, where more than US$80 billion worth of equity and US$94 billion in debt have been raised in the past six months.

Many of the family empires brought low by the Asian financial crisis a decade ago are now back in business.

And merchant bankers boast of the speed at which initial public offerings and bond issues are snapped up. Order books are filled before companies even start on their roadshows.

Indeed, it has never been better for bankers, who suffered badly when loans to regional companies turned bad a decade ago.

Business for many of them now means arranging loans, often in the form of a convertible bond, and getting other investors to buy these loans and bear the risk while they collect a fee for their efforts.

To these bankers, just knowing whether a borrower is a sound credit risk is not good enough.

The size of the fee that can be collected for arranging the loan and selling it off to someone else is also a key consideration.

But the lure of big fees has led many observers to wonder if these bankers had fully assessed the consequences of extending big loans to riskier corporate borrowers.

If the music stops this time around, the fear is that some regional companies may again find themselves heaving under a mountain of debt they are unable to repay - raising the spectre of 1997 all over again.

The ease with which lesser-known companies can borrow money by issuing convertible bonds has led to concerns that they may turn into South-east Asia's equivalent of the US borrower with a poor credit history.

The recent party has been so wonderful that some companies have been able to insist on a 50 per cent premium over their prevailing share price for converting the bonds into equities.

But the revelry has lasted so long that some companies' bosses do not realise that investors might want cash, rather than shares, as repayment for loans, as the global market turmoil strikes fear in their hearts.

But it might not be just the banks that would be caught out if regional companies are unable to repay loans.

A much bigger spread of investors could feel the pinch as the bonds are now embedded in the balance sheets of financial institutions all over the world.

Just last week, two Australian hedge funds and one from the US had to close shop as American credit woes engulfed financial markets. Also, a small German lender had to be bailed out.

Investors will be watching anxiously over the next few months to see if the number of corporate defaults grows, as the global credit crunch raises companies' borrowing costs and erodes their ability to roll over their debts.

There will be plenty of buying opportunities as the crisis runs its course. In the meantime, sit tight and keep your options open.

engyeow@sph.com.sg