India and Taiwan

Two pieces for MoneyWeek this week, both on markets that have been very much out of favour over the past year.

The cover story looks at India’s recent problems, many of which are long-standing issues that foreign investors should know but often overlook.  One reason why the Indian market performed in 2011 was the huge flow of foreign investment in 2010 (a net US$29bn) amid unreasonably high expectations – when those expectations collided with reality ,there was nothing to support it at a time when the macro outlook was weak and the central bank was tightening.But given how far stocks have come down, 2012 might prove to be a good year to invest, although an immediate turnaround is unlikely.

I wish I could say the same for Taiwan. The result of today’s elections has been far more decisive than I expected when I wrote about it on Friday and we may well see a relief rally next week. But the outlook for the crucial tech sector (more than 50% of the Taiwanese market) in 2012 is not good. This is an economy where I’ve long expected a structural turnaround, but it clearly isn’t here yet.

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