The hidden risks of investing in Asia

Asia has seen an investment boom as investors seek ways to avoid the imbalances afflicting the US economy. But Niels C. Jensen at Absolute Return Partners warns that investors aren't considering the risks - including the threat of high inflation...

A not so widely recognised consequence of the long-running boom in U.S. consumer spending is the high growth that most Asian economies have enjoyed in recent years. Strong export driven growth has in fact more than compensated for relatively weak consumer demand in many Asian countries and allowed the region to grow out of the problems it faced during the crisis in the late 1990s.

The argument in favour of investing in Asia goes approximately like this: "Under no circumstances do I want to invest in U.S. dollar assets. With the big fiscal deficit and the large and growing current account deficit, it is an accident waiting to happen. I think the opportunities are far more exciting in the fast growing region of Asia, as strong exports and rising standards of living will continue to fuel growth."

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