Asian Investment Issues: Potential Political Risk

PanAsianBiz ^ | July 7, 2006 | Dr. Bill Belew

[G. Stolyarov II]

I attended a recent Investment in China and India Summit hosted by Financial Research Associates. I will use this forum to share some of insights that were given at this summit for the benefit of those hoping/thinking/planning on investing in an Asian country -- China, India, or Japan.

It is difficult to predict the effect of political events on the investment environment. Potential areas of conflict in Asia include:

China and Taiwan - China wants its renegade island back in the fold.

India and Pakistan - historical conflicts.

North and South Korea (and allies) - North Korea is developing a reputation for throwing things.

China and Japan - bad blood since WWII. Watch for it to boil in August.

However, these risks are minimized when put in the context of an overall portfolio.

In addition, major events in any of these areas will affect trade and exports across the world, whether or not one is invested in these countries.

Source: Probitas

[G. Stolyarov II]

This article illustrates the importance of political stability to a sound economy; the assurance of freedom from a government that respects individual rights and allows markets to take their course is just as important as the de facto ability to build factories, create products, and invest money. The businessman and the investor will only act decisively if they know that the fruits of their labor will not be in danger of expropriation. See Dr. Belew's blog at PanAsianBiz