Nov 252011

Vietnam has proved to be a terrible investment over the last four years. Widely seen as the “next Asian tiger” in the middle of the decade, an article in the FT today shows how attitudes have changed. Here’s a sample:

The government’s focus on breakneck growth at the expense of economic stability has led to growing inequality, soaring inflation, a lack of confidence in the currency and fears of a banking crisis.

Domestic overheating, coupled with the deterioration of the global economy, has forced many investors, foreign and Vietnamese, to revise their view of the country’s prospects. Deep-seated problems, such as corruption, poor education and infrastructure bottlenecks – all often overlooked by investors in the boom years – have moved into sharp focus.

And with inflation driving wages higher but labour skills not advancing as quickly, fresh questions are arising. Among them is whether Vietnam’s Communist party can force through painful reforms needed to ensure they avoid the “middle-income trap” ensnaring the likes of Malaysia and Thailand, whose economies are a source of cheap labour but not yet makers of higher-value products.

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Nov 112011

Japanese optics group Olympus (JP:7733) has finally admitted that more than US$1bn in payments for acquisitions were not what they appeared to be. The twist in the tail is that these weren’t bribes or payments to cronies, but rather an attempt to cover up losses on investments dating back to the 1990s.

The revelation didn’t surprise me as much as most. That’s not because I have inside knowledge on Japanese corporate malfeasance, but because I’d seen an excellent analysis of the Olympus scandal on the Nihon Cassandra blog that anticipated exactly this development. (Add this blog to your reading list – it’s infrequently updated, but one of the best out there.)

I almost wrote about this last week, but decided it was of too limited interest. But with the stock still in freefall (it’s down 80% since mid October), I’m starting to wonder if this is a good opportunity to invest – or whether it risks being an effort to catch a falling knife. Continue reading »